Australia’s east coast gas market just entered a new phase of uncertainty, with the risk of a gas shortfall.

According to the ACCC’s Gas Inquiry Report, released on June 30, the short-term supply outlook has deteriorated significantly since December. A potential gas shortfall in Q4 2025 and throughout 2026 is now on the table – and that changes things.

So, What’s Going On?

Several key producers have downgraded their forecasts. At the same time, uncontracted gas controlled by Queensland LNG exporters may be directed offshore unless policy or commercial arrangements change. With LNG exporters controlling nearly all uncontracted supply, their decisions are now central to whether or not the east coast experiences a shortfall.

Southern states, increasingly reliant on Queensland gas, face growing exposure as local reserves decline due to ageing gas fields reaching the end of their economic life, limited new investment and exploration activity, and longstanding regulatory, planning, and commercial barriers to supply development.

Despite prices easing in late 2024, new data confirms a rising risk of gas shortfall, and a tougher landscape for gas users who need long-term certainty. With fewer long-term agreements being signed, businesses are left managing short-term volatility in a market with diminishing certainty.

The ACCC's Key Warnings

• Gas Shortfall risk in Q4 2025 and through 2026 if uncontracted Queensland LNG gas is exported rather than diverted to domestic users
• Southern states face increasing dependence on Queensland gas as local reserves decline
• Long-term contract activity remains limited, with most transactions happening on a short-term basis
• Gas prices have eased, but still remain well above pre-2022 levels, averaging $13.34/GJ for producer offers and $14.34/GJ for retailer offers to C&I users
• Market activity is softening, with fewer offers from retailers and less long-term security for industrial gas users

How the Forecast Has Shifted

In its December 2024 report, the ACCC projected a surplus of 8 to 21 PJ for Q4 2025. But in its latest update, that’s been revised dramatically – now showing anything from a 2 PJ shortfall to an 11 PJ surplus, depending on how much uncontracted gas is exported offshore. That 10 PJ downgrade reflects lower production forecasts from key Queensland producers, and highlights just how quickly conditions can shift in a tightly balanced market.

Why does this matter? Q4 is typically when southern gas storage facilities, such as Iona, are filled ahead of winter. If sufficient gas isn’t available or directed south during this period, those storage targets may fall short. That puts winter 2026 supply at risk, especially during peak demand months.

In a system where storage, transport, and procurement decisions are tightly interlinked, the message is clear: timing, flexibility, and forward planning are critical.

What This Means for Your Business

The east coast gas market is becoming more volatile, with shorter contracting cycles and increased reliance on discretionary export decisions. With LNG producers now control most of the "swing gas", the flexible volumes that can be directed either to export or the domestic market, it's harder for businesses to plan with confidence.

For many commercial and industrial (C&I) users, the shrinking pool of long-term Gas Supply Agreements (GSAs) is forcing a shift toward short-term and spot market deals – often with less favourable terms and more exposure to sudden price or supply shocks.

These developments have major implications for:

• Energy-intensive businesses with exposure to seasonal demand peaks (e.g. process loads, heating)
• Businesses relying on annual or reactive procurement cycles
• Project developers and asset managers who need forward visibility and price certainty
• C&I gas users seeking multi-year contracts, who now face a limited and highly competitive market
• Businesses without storage or demand flexibility, who may struggle to manage peak periods in 2026

Even with sufficient gas reserves in the ground, delays in development, upstream market concentration, and policy uncertainty mean that supply does not equal access – and even then - access does not always guarantee affordability.

What Utilizer Is Doing for Our Clients

This report confirms what many of our clients have already been sensing: gas procurement is shifting from a static, once-a-year activity to a strategic, ongoing process. We're working closely with our clients to help them adapt to the shifting gas landscape. While no two portfolios are the same, some common priorities are emerging:

• Helping clients reassess contract timing and risk exposure, especially in light of forecast Q4 2025–Q2 2026 pressures
• Monitoring key supply-side developments, including LNG export trends and production outlooks
• Advising on broader procurement strategy, including how to build flexibility into future energy planning
• Keeping clients informed, so they can make confident, timely decisions rather than reacting under pressure
• Planning for electricifcation, reducing the use of gas over time where possible

Our Take on the Gas Shortfall

Short-term volatility, tightening supply, and structural delays in new development are converging to reshape the gas market. This isn’t just a temporary squeeze – it reflects a fundamental shift in how gas will be procured, priced, and prioritised in the years ahead.

At Utilizer, we’re helping our clients move early, stay informed, and plan strategically – with clarity, commercial realism, and the confidence that comes from having the right guidance.

If it's time to review your gas position or you need help understanding how these developments may affect your business, reach out. Our experts are here to guide you.