Overall gas supply on Australia's east coast is expected to be sufficient in the second quarter of 2026; however, the southern states (Victoria, New South Wales, South Australia, Tasmania and the Australian Capital Territory) will collectively rely on surplus gas from Queensland and gas stores to meet demand, the ACCC's latest gas inquiry report reveals.
The latest forecasts from gas producers suggest a range between a 15 petajoule (PJ) surplus and an 8 PJ shortfall for the east coast gas market in the second quarter of 2026, depending on the amount of uncontracted gas exported by the Queensland-based LNG producers.
Queensland is anticipated to have sufficient gas to meet local needs, while the southern states are projected to need an additional 26 PJ of gas through the quarter.
"The gap between gas demand and supply from southern gas sources leading into and through winter has widened in recent years, largely due to reduced production from legacy gas fields and increased demand for gas-powered electricity generation," ACCC Commissioner Anna Brakey said.
"Some of Queensland's surplus gas will need to be transported to the southern states to help fill the forecast supply gap in the second quarter of 2026."
As at Monday 22 December, Victoria's Iona gas storage facility was estimated to require about 12 PJ of gas injections before May 2026 to replenish gas stores ahead of the 2026 winter period.
The quarterly supply-demand outlook for Australia's southern states (2026)
Source: ACCC analysis of data obtained from gas producers in October 2025 and of the domestic demand forecast (Step Change scenario) from AEMO, Gas Statement of Opportunities (GSOO), March 2025
Note: Totals may not sum due to rounding. The quantity required to meet long-term LNG SPAs includes feed gas requirements (such as fuel) required to produce LNG.
Recent prices are within expected ranges
Contracted gas prices have been steady at around $13-15 per gigajoule (GJ) since falling from the very high levels seen during 2022-23. The prices are within expected ranges given expectations of LNG netback prices and domestic supply and demand conditions.
Prices offered by gas producers to retailers for 2026 supply fell 3 per cent to $13.56 per GJ in the first half of 2025. Prices offered by gas retailers to commercial and industrial users fell 5 per cent to $14.43 per GJ.
While prices appear to be relatively stable, more gas is being contracted on a short-term basis than in previous years. The volume of gas sold under short-term contracts increased by 78 per cent to 57 PJ in the first half of 2025 compared to the first half of 2024.
"We've heard from a range of commercial and industrial gas users that, while prices have stabilised, current price levels continue to pose challenges to the viability of their businesses," Ms Brakey said.
"These challenges are exacerbated by difficulties in obtaining long-term agreements for gas supply. Short-term contracts do not provide the cost predictability and supply certainty that longer-term contracts provide."
The ACCC has also continued to hear concerns from commercial and industrial gas users about the inflexibility of the expression of interest processes under the Gas Market Code.
Gas users remain concerned about a lack of competition between gas suppliers, though some users told the ACCC they had observed recent improvements.
Gas costs of production
The ACCC has released with today's report advice from an independent research firm on long-run gas production costs in the east coast gas market. Gas production costs can influence the prices producers are willing to accept for supply as well as longer-term investment decisions. One of its key observations is that, in the absence of new sources of gas supply, production costs are expected to rise over time as lower cost reserves are depleted.
The ACCC welcomes feedback on this accompanying report.
LNG netback price series review
The ACCC has commenced a review of the methodology for calculating LNG netback prices to ensure that this price series remains an accurate resource for market participants on price benchmarks relevant to Australia's east coast gas market. The ACCC has set out issues relevant to the review in the December 2025 gas inquiry report and invites submissions from stakeholders by 6 February 2026.
Retailer best practice selling guidance
The ACCC has developed draft voluntary best practice retailer selling guidance for comment. The draft guidance follows the ACCC's Retailer Behaviour Review last year, which found that some retailers' selling practices persistently fell short of what would be expected in a well-functioning retail market.
The draft guidance is published in the December 2025 gas inquiry report and is open for comment until 27 February 2026.
Background
Australia's east coast gas market is an interconnected grid joining Queensland, New South Wales, Victoria, South Australia, Tasmania and the ACT. The Northern Territory and Western Australia are separate gas regions.
In 2025, the Australian Treasurer directed the ACCC to hold an inquiry into the market for the supply of natural gas in Australia. This direction provided that the ACCC would continue its inquiry into the gas market, which first commenced in 2017. The new direction requires the ACCC to conduct the inquiry until 30 June 2030.
The ACCC's inquiry examines the wholesale gas market, primarily gas sold by producers to large gas buyers, including commercial and industrial gas users and gas retailers.
The ACCC's next interim gas inquiry report is scheduled for March 2026.
