NSW facing severe gas shortages, says Ian Macfarlane


The lack of progress in accessing gas reserves locked up in coal seams could see NSW face major gas shortages and a sharp increase in wholesale gas prices within the next few years, Federal Industry Minister Ian Macfarlane has warned.

NSW facing severe gas shortages, says Ian Macfarlane
Image credit: flickr User: WabbyTwaxx

He said indecision in government policy and the opposition in some areas to tap into locked up gas reserves meant that the state “will be very short of gas in three to four years”  and en route to be hit with a further increase in gas prices following the 20% increase which took effect in July.

According to the Sydney Morning Herald, Mr Macfarlane had recently voiced his support for building a pipeline linking Northern Territory gas reserves to the east coast gas pipeline grid, which is expected to ensure an uninterrupted gas supply once the series of large gas export projects in Queensland start up later this year.

“We’re going to have to come up with a solution,” Mr Macfarlane said, referring to the ongoing discussion between the federal and state governments regarding the proposal for a pipeline to the Northern Territory.

According to him, the project would need to be underpinned by long-term supply contracts to be financially viable.

“The aim is not to get cheap gas into NSW, but it will be gas,” he said.

It is estimated that the start of the Queensland gas export projects could push wholesale gas prices into double figures ($10 a gigajoule and above), causing local prices to rise as Australian gas users begin competing with international export markets for supply.

Mr Macfarlane confirmed that the federal government would not commit any funds to the proposed pipeline but the Northern Territory government has insisted that it wants the Federal Government to help underpin supply contracts for the proposal to proceed.

The state of Victoria, where gas forms a much larger part of energy use, is also expected to be hit with a sharp increase in gas prices.