Wholesale gas supply on Australia's east coast is expected to be tight and large volumes of gas will likely be required from storage to meet demand in the third quarter of 2026, the ACCC's latest gas inquiry report reveals.
The east coast gas market is predicted to have a supply-demand balance of between a 12 petajoule (PJ) shortfall and a 3 PJ surplus in the third quarter of 2026, depending on how much uncontracted gas is exported by liquid natural gas (LNG) producers.
Planned maintenance on LNG plants may affect exports during the quarter.
Gas supply is expected to be particularly tight for the southern states (Victoria, New South Wales, South Australia, Tasmania and the Australian Capital Territory), with additional gas needed every month between April and September 2026.
The additional gas will need to be sourced from either Queensland via the South-West Queensland Pipeline or be withdrawn from storage facilities.
Iona Underground Gas Storage in Melbourne's west is the largest of these storage facilities and is currently on track to be full by early May.
"The amount of stored gas available in the southern states in the third quarter of this year will depend significantly on how much gas is drawn down over the coming months," ACCC Chair Gina Cass-Gottlieb said.
"We project the southern states will have a supply gap of 16 PJ in July 2026 alone, so it is important that the Iona storage facility reaches its maximum capacity ahead of winter."
"We anticipate that the market may also need support from LNG producers to meet demand, which would also ease pressure on storage facilities." Ms Cass-Gottlieb said.
Southern states supply-demand outlook for April to September 2026 (PJ)
Source: ACCC analysis of data obtained from gas producers in January 2026 and of the domestic demand forecast (Step Change scenario) from AEMO, Gas Statement of Opportunities, March 2026.
Note: 'Potential supply from Queensland' is the amount of excess gas that can be transported to the southern states in the scenario where LNG producers export all their uncontracted gas. There will be additional Queensland excess gas available if LNG producers export less uncontracted gas.
Prices increase as buyers seek to secure future supply
Gas prices offered by producers under long-term contracts for 2026 increased in the final quarter of 2025 by an average of 4 per cent, to $13.55 per gigajoule (GJ).
Equivalent contract prices offered by retailers averaged $13.93/GJ, an increase of 3 per cent over the same period.
"Despite recent increases, contracted gas prices for 2026 remain steady at around $13-15 per gigajoule - well down from the very high levels seen during 2022-23." Ms Cass-Gottlieb said.
Producer prices for 2027 supply rose by 10 per cent to $13.93/GJ, while retailer prices for supply in 2027 fell by 6 per cent to $14.31/GJ.
Middle East conflict
The information on contracted prices and volumes in this report reflect market conditions up to January 2026.
Future reports will cover any effects of recent global market developments, including in the Middle East, on domestic gas prices and supply.
"Changes in global energy prices may impact domestic gas prices through commodity-linked mechanisms in long-term contracts, and where market participants have regard to international prices when determining fixed prices," Ms Cass-Gottlieb said.
"Higher international LNG prices may also incentivise higher exports from Australia and affect spot gas prices,"
"So far, domestic spot prices are trading below the long-term contract prices published in this report," Ms Cass-Gottlieb said.
"However, we know the situation is continuing to evolve, and we will be closely monitoring the impact of the conflict in the Middle East on domestic natural gas prices and the supply outlook."
Buyers in the east coast gas market typically maintain gas portfolios comprising both contracted and spot gas. This means the impact of recent international LNG price spikes may be partly offset by the contracted pricing arrangements already in place.
LNG netback price series will be maintained
Following a review of the LNG netback price series, the ACCC will continue publishing netback prices, which provides greater transparency on prices that may be offered by LNG producers.
This decision has been made after reviewing global and domestic gas market developments, and considering public submissions from a range of gas market participants, including LNG producers, domestic producers, retailers and user representatives.
Key elements of the methodology will be maintained, including:
- using the Japan-Korea Marker as the short‑term reference price and forward Brent crude for medium‑term pricing
- 2‑year and 5‑year forward timeframes for the short and medium-term series
- existing approaches to account for freight, liquefaction and pipeline costs.
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 2025 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.
LNG netback prices are a measure of the opportunity cost to LNG producers of supplying uncontracted gas to the domestic market, rather than to Asian LNG markets.
It is calculated by taking the price that could be received for LNG and subtracting or 'netting back' the costs incurred by the supplier to convert the gas to LNG and ship it to the destination port. It represents the point of financial indifference for LNG producers between supplying the domestic market and exporting the gas. The ACCC began publishing LNG netback prices in 2018 to improve price transparency in the east coast gas market.
Spot prices reflect values as of 31 March 2026.
The ACCC's next interim gas inquiry report is scheduled for June 2026.
