On 19 April 2017, the Australian Government directed the ACCC to conduct a wide-ranging inquiry into the supply of and demand for wholesale gas in Australia. The ACCC is required to submit interim reports no less frequently than every six months and provide information to the market as appropriate, with a final report to be submitted by 30 April 2020.
The first interim report, issued on 25 September 2017, found a substantial shortfall for the east coast was likely in 2018.
Following the first interim report, on 3 October 2017, the Australian government reached a heads of agreement with the Queensland LNG producers requiring them to supply more gas in to the Australian domestic market. The agreement states that the ACCC will be monitoring the LNG exporters’ compliance with the heads of agreement, as well as the sales, offers to sell and bids declined of the other suppliers.
On 13 December 2017, the ACCC released the second interim report, focussing on the operation of the East Coast Gas Market, where there are continuing immediate and longer-term concerns. The ACCC reports that although there have been important short-term improvements in conditions, the market is still not operating as a well-functioning and competitive market.
The ACCC will continue to make market information available as appropriate and expects to produce the next interim report towards the end of the first quarter of 2018.
Future work of the Inquiry will include:
- producer-based and retailer-based invoiced gas price series (as reported in September 2017 report)
- conditions for, and pricing of, access to transportation and storage services
- retailer pricing, costs, and margins
- improvements to market transparency and consistency of reporting.
The ACCC is consulting on an LNG netback price series, which may result in the ACCC commencing publishing an LNG spot netback price series from around the first quarter of 2018.