Column: Australia's natural gas industry frets about supply. They should worry about demand | Reuters

Column: Australia's natural gas industry frets about supply. They should worry about demand | Reuters

Australia, the world’s largest exporter of liquefied natural gas, is facing a dilemma when it comes to domestic demand for the fuel, as the government’s plans for a gas-fired economic recovery run into some confronting realities.

Domestic gas consumers are facing a shortfall in supply within two to three years, and the exploration and production industry is increasingly warning it will be difficult, if not nearly impossible to boost output in the time available.

It may seem incongruous that a country that has in the last 10 years overtaken Qatar to claim the crown as the world’s biggest shipper of LNG is facing a shortfall in supply that threatens an already under pressure manufacturing base.

But a combination of over-investment in LNG export terminals on the populous east coast, restrictive government policies in some states and at a federal level and Australia’s challenging geology and vast distances now threaten to radically re-shape the country’s natural gas sector.

The message from speaker after speaker at this week’s Australian Domestic Gas Outlook (ADGO) conference in Sydney was consistent.

There isn’t enough natural gas to meet demand, what gas there is to be found and developed is likely to be considerably more expensive that the discoveries of the past, and what new gas can be brought to market can’t be delivered fast enough.