WA gas 'shortfall' driven by exporters' export preference, not a shortage: new ACCR analysis

New analysis from ACCR finds the domestic gas shortfall modelled for Western Australia is driven by LNG exporters choosing to sell gas into higher-priced export markets, not a technical shortage of gas.

ACCR's report, Browse: unnecessary, costly, high risk, finds that committed and uncontracted gas produced through existing domestic infrastructure can meet WA's domestic gas demand under every AEMO scenario, raising questions about the case for approving Woodside's Browse gas field.

Further insights include:

• The shortfall modelled by others, including AEMO, reflects LNG exporters' commercial preference to sell gas offshore as higher-priced LNG, rather than a technical lack of upstream supply.
• Across the 2026-2045 period covered by AEMO's demand forecast, the smallest annual surplus of uncontracted gas is approximately 9.6 million tonnes in 2035, equivalent to 107% of that year's domestic demand.
• Even if a technical shortfall did emerge, Browse would not solve it. The main constraint on getting more gas to the domestic market is the capacity of existing delivery infrastructure, not the volume of gas produced, so additional upstream supply from projects like Browse does not address it.
• It is argued that Browse is needed to backfill the North West Shelf (NWS) plant as its supply declines. However, the decline in supply from NWS could be offset using gas from Scarborough via the Pluto-KGP Interconnector.
• Browse is more expensive than 70% of competing global gas resources.

Alex Hillman, lead analyst at ACCR, said:

"The modelled shortfall in WA's domestic gas market reflects a commercial choice by LNG exporters to sell gas offshore at higher prices, not a technical shortage of gas being produced.

"It doesn't seem sensible to rely on Browse being built. Woodside appears to be sending mixed signals. It excluded the project from the scenarios it presented to investors last November, then told a Senate committee months later that the same scenario shows it stacking up.

"With all its JV partners, the project has already spent more than $2.5 billion in publicly disclosed costs on a remote, operationally complex development. Woodside describes its approach as disciplined capital allocation. A project priced above 70% of its global competitors is hard to square with that description.

"The energy transition case for Browse is weak. Gas-importing countries have more commonly displaced coal with renewable energy than with LNG, the cost of renewables and battery storage continues to fall well below LNG, and many countries are focusing energy investment on renewables to reduce their exposure to LNG costs and geopolitical risks."