Australia’s east coast is forecast to move from the current tight gas market towards a modest surplus in the first quarter of 2026, but the Australian Competition and Consumer Commission (ACCC) says that outcome hinges on how much uncontracted gas liquefied natural gas (LNG) producers elect to export.
The ACCC’s latest gas inquiry interim report, released on Wednesday, estimates a surplus of between 2 and 24 petajoules (PJ) for the east coast in Q1 2026 — a wide range that depends on LNG exporters’ decisions about uncontracted volumes.
“The Queensland LNG producers have reported a reduction in contracted LNG exports, and now expect to have 22 PJ of uncontracted gas available in the first quarter of next year,” ACCC Commissioner Anna Brakey said. “Given ongoing concerns about sufficiency of domestic gas supply, the ACCC will be monitoring whether and how this gas is offered to domestic buyers.”
Despite the potential improvement in supply overall, the ACCC warned that conditions will remain strained in southern states. “Despite the improvement, the supply-demand outlook remains tight in the southern states,” Ms Brakey said. “For the first time, southern gas producers are not expecting to produce surplus gas in the first quarter of the year, when demand is usually at its lowest. This may create challenges for fully replenishing southern gas storage facilities ahead of winter 2026.”
The report draws on producer data supplied in July 2025 and the Australian Energy Market Operator’s domestic demand forecast (the Step Change scenario) published in the March 2025 Gas Statement of Opportunities.
Although more long‑term supply deals have been signed this year for deliveries in 2026 and 2027, the ACCC found the total contracted volumes remain below levels seen before 2022 and that most of the new contracts last only one year. Producers and retailers contracted 18 PJ for 2026 supply and 21 PJ for 2027.
Price offers for 2026 supply eased slightly in the first half of 2025, with producer offers averaging $13.12 per gigajoule (GJ), down about 2 per cent compared with the second half of 2024. Retailer offers averaged $14.33/GJ. For 2027, producer contract prices averaged $13.93/GJ and retailer contracts $14.30/GJ.
The ACCC also reviewed the effectiveness of policy measures introduced since 2022 — notably the Gas Market Code, the Commonwealth Heads of Agreement with LNG exporters (HoA), and the Australian Domestic Gas Security Mechanism (ADGSM) — and concluded they have not materially improved outcomes for domestic gas users.
“There are limits to what the gas policy measures can achieve on their own if the underlying causes of inadequate supply and ineffective competition are not addressed,” Ms Brakey said. “In addition, they may also be having some unintended incentive effects and causing inefficiencies in gas supply negotiations.”
The regulator found the 2023 reforms to the ADGSM appear to have reduced LNG producers’ incentives to make a net contribution to the domestic market, a change that may have unintentionally increased the risk of domestic shortfalls. It also noted that since the 2022 Heads of Agreement was established, volumes offered to the domestic market by LNG producers have fallen while LNG export volumes have risen.
The ACCC has submitted a detailed paper to the government’s Gas Market Review setting out its observations and recommending reforms to promote longer‑term market efficiency and to ensure the interim mechanisms are fit for purpose.
The ACCC’s gas inquiry was launched in 2017 to improve transparency in the gas market and monitor supply. A new direction issued on 29 August 2025 formally extends the inquiry to 2030 and requires quarterly reporting; the ACCC’s next interim report is due in December 2025.
