The Federal Government has finalised new gas supply deals for the east coast energy market, easing concerns over long-term supply gaps as the country moves rapidly away from its dependence on coal-fired power stations.
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According to Reuters, more than 260PJ of gas will be supplied through 2033 in two new commitments with Exxon Mobil’s Esso unit and Woodside under the government’s gas code rules, Energy Minister Chris Bowen said.
Australia last year extended a price cap of $12/GJ on natural gas until at least mid-2025, but it relaxed the rule for big producers if they agreed on domestic supply commitments for the country’s east.
“Gas is critical to supporting a lower-cost, more renewable grid as aging coal exits, and to support Australian manufacturing,” Bowen said in a statement.
The supply deals, sufficient to power east-coast gas-fired power stations for around two-and-a-half years, will directly feed into stations previously identified as being at particular risk of seasonal shortfalls, Bowen said.
This would ensure enough domestic supply to keep downward pressure on prices, he said.
In March 2023, the Australian Energy Market Operator (AEMO) warned the country faced risks of long-term supply gaps and must require additional commitments to expand its domestic gas supply.
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Though Australia produces more gas than it needs to meet its domestic demands, most of the supply is exported overseas.