Tag Archive for: gas

Energy security needs pipelines, not promises

Few issues are as urgent and as poorly understood as Australia’s energy policy. While we build up renewable energy to replace an ageing and increasingly uneconomic coal fleet, we are more dependent on gas to support the grid. Yet we are at risk of more severe and more frequent gas shortfalls as soon as 2028, and we lack the commitment to investing in a viable long-term solution.

Australia needs to build a national pipeline network to ensure domestic production and supply.

Energy isn’t just another commodity. It’s the invisible infrastructure behind every product we make, every commodity we mine, every service we deliver and every aspiration we hold for continued stability, security and resilience. Energy underpins our current standard of living and future prosperity.

According to analysis by the Grattan Institute, we are at risk of increasing gas shortfalls: 130 days of shortfall in 2025, then 201 in 2026, 266 in 2027, and up to 322 in 2028. All this despite being one of the world’s largest gas producers.

This paradox is driven by extensive exports, domestic price caps and an over-reliance on global maritime supply chains for critical energy imports. As recently discussed in The Strategist, building import terminals for liquified natural gas at locations such as Port Kembla and Geelong is a reactive approach that overlooks the need for long-term resilience. Considering the government’s Future Gas Strategy extends to 2050, Australia needs to invest in sovereign, sustainable and long-term solutions.

Countries with strategic intent don’t just chase export earnings; they build resilience. They use domestic gas supply and national pipeline infrastructure to underwrite economic sovereignty and develop complementary domestic industries. In the United States, for example, shale gas development has transformed global markets while also revitalising domestic manufacturing. It has created jobs and secured affordable energy for households. Closer to home, countries across Asia are investing in energy corridors that ensure both competitiveness and security.

Meanwhile, Australia is doing what it too often does: relying on luck, timing and long-held assumptions that the market will sort it out. It won’t. The convergence of economics, geopolitics and domestic industrial policies too significantly distorts the market for a purely laissez-faire approach.

Australia needs a more strategic approach to energy infrastructure. The consequences of our current reactiveness are real. Industry is slowing. Energy costs are rising. Investment is stalling. As the government signals commitment to gas, it should equally commit to building the backbone of long-term energy security: a national integrated pipeline network connecting Australia’s gas basins to consumers.

Pipelines are important economic enablers. While pipelines currently connect the states and territories, excluding Western Australia, capacity limits hinder the network significantly. It needs upgrading and expanding. Unlike other infrastructure assets, Australia seems content to treat gas as someone else’s problem and is slow to step-in.

The government is often left with problems too difficult for the market to solve on its own; if we don’t incentivise private capital to build pipelines now, the cost will fall on taxpayers later. Opportunity costs of a failure to act lie in lost jobs, declining industry and weakened geopolitical leverage.

The Beetaloo Basin, a vast untapped resource in the Northern Territory, offers a critical opportunity. It is likely to be the lowest cost and lowest emissions source of gas capable of fulfilling Australia’s domestic needs. APA Group is in the first stage of investment in the basin, connecting it to the NT’s gas market. This is a crucial step for energy security in the NT, where approximately 80 percent of power generation relies on natural gas.

Maximising the project’s value requires connecting it to the east-coast market. Domestic gas produced in the north and transported to southern demand centres should deliver significantly lower cost and lower emissions than imported liquified gas, particularly due to the government’s existing price controls.

This isn’t just about resources; it’s about national capability. We can’t have a modern defence industry, a competitive manufacturing base, or even affordable food processing without affordable, reliable energy. Doing nothing is not a neutral position, it’s a choice that leaves us weaker.

To make this vision a reality, the government must provide certain guarantees to attract private capital. Investors need confidence that if they build pipelines, the gas will flow. This means establishing clear, long-term supplier agreements and maintaining stable policy settings to reduce risk and encourage investment.

In late 2024, the Senate Select Committee on Energy Planning and Regulation rightly recommended that the Department of Climate Change, Energy, Environment and Water update the 2019 Strategic Energy Plan. This new plan must be strategic in a real sense: it must recognise Australia’s energy security challenges and the inability to outsource energy production. It must commit to domestic solutions.

National resilience relies on stable energy supply, now and in the future, and it needs pipelines to complement new supply. A national pipeline network aimed at supporting domestic industry and Australian households isn’t just common sense. It’s nation-building.

The gas plan that’s sailing Australia into strategic peril

Australia’s east coast is facing a gas crisis, as the country exports most of the gas it produces. Although it’s a major producer, Australia faces a risk of domestic liquefied natural gas (LNG) supply shortfalls as soon as 2028.

Domestic price caps, intended to keep residential energy costs down, makes exporting gas more profitable. So importing gas, and therefore building LNG import terminals, appears to be the policy of choice for the Victorian government. However, relying on imported LNG will create a vulnerability in energy security.

Instead, Australia should be developing resilience. We should prioritise new domestic projects, such as the Northern Territory’s Beetaloo Basin, to increase domestic supply and improve our energy resilience. Distribution infrastructure would be needed.

Import terminal projects, such as the recently constructed Squadron Energy’s Port Kembla terminal, and Viva Energy’s Geelong proposal, are pitched as fast, efficient, market-driven solutions. The essential logic: if we export too much, we can simply buy it back on the global market.

It’s a traditional market solution that does not account for strategic risk and the potentially higher prices of imported gas. While commercially convenient, it assumes ongoing access to the international market.

Importing LNG ignores lessons we should be learning from Australia’s liquid fuel supply chain failures. Australia imports around 90 percent of its refined fuels. Nearly all local refineries have shut. We rely on complex, just-in-time maritime supply chains for the fuel that powers our economy and sustains our military.

The Department of Defence and national security experts have long warned that international maritime supply chains are vulnerable to disruptions—whether due to conflict, coercion or climate. Defence continues to scramble to patch our vulnerability with stockpiles and contingency planning.

Yet our gas policy seems intent on replicating these vulnerabilities. We are creating dependency on overseas production and on maritime transport. LNG tankers, and the floating storage regasification units that they feed, rely on uninterrupted access to global trade routes. The same routes that are subject to increasing contestation.

Gas is a strategic resource as well as a commercial product, with applications across commercial, industrial and residential sectors. It is particularly important for Australia’s mining and manufacturing sector. In the event of major conflict in the Indo-Pacific, Australia’s maritime trade will be directly threatened. It will need to defend itself and keep the economy running, and likely increase domestic manufacturing capacity as well. Gas will be an important part of this.

The government is committed to gas as a long-term source of energy, and there is currently no viable clean alternative to replace its industrial applications. We need similar commitment to expanding overall gas supply and production.

The federal resources minister, as a last resort amid shortfall, can redirect LNG exports back into Australia. But such an interventionalist practice would likely harm foreign investor confidence and damage important bilateral relationships.

Tapping available domestic resources is a better option. Australia has ample gas reserves in the Northern Territory, notably the Beetaloo Basin. But we lack the infrastructure to transport that gas where it is needed. A new pipeline connecting the basin to the east coast would be a nation-building project. It would also build resilience by creating domestic supply for a strategic resource.

Such projects will face such challenges as timeframes, costs and environmental risks. Each must be considered and carefully investigated. But failing to secure resilient domestic energy supply has its own costs and risks. Dependency on imported gas makes us vulnerable to global markets, international maritime transport and foreign actors. All while we have large domestic reserves.

Importing LNG will unnecessarily outsource control over a crucial economic input. Building overland pipeline infrastructure to access domestic reserves will develop self-reliance and retain Australian ownership over a strategic resource.

The Australian Competition and Consumer Commission has warned that while imports may be a viable short-term option with lower up-front infrastructure costs, they alone will not guarantee price stability or energy security. The Defence Strategic Review has called for whole-of-nation approaches to resilience. Gas is a test case.

We need to consider strategic risk in our energy planning. Short-term price signals cannot outweigh long-term sovereign capabilities and strategic interest. Nor can national security and energy policy remain separate.

We must act right now, as energy policy is at the fore of national political debate. We should fast-track the development of reserves such as the Beetaloo Basin and prioritise projects that underpin energy resilience and future prosperity. We should treat gas like the strategic asset it is and commit to pipeline infrastructure that connects our nation, not just our markets.