Australia, one of the world’s largest exporters of liquefied natural gas (LNG), is set to face a significant shift in its energy landscape. The country is on track to soon begin importing LNG to meet domestic demand, particularly in its eastern states, as aging offshore gas fields deplete and infrastructure remains inadequate to support energy needs.
According to Rystad Energy, eastern Australia is facing a growing energy shortfall, primarily due to the depletion of older gas fields and the lack of sufficient pipeline capacity to transport LNG over long distances from the country’s main production hubs in the northwest. The Australian Energy Market Operator (AEMO) has repeatedly raised alarms about potential energy shortages in the southeastern regions, including New South Wales, Victoria, and Tasmania, with the risk of shortages becoming critical as soon as 2027.
Kaushal Ramesh, Vice President for Gas and LNG Research at Rystad, highlighted the situation, noting that the energy buffer for these states is now severely limited compared to the energy crunch of 2022. Ramesh warned that without intervention, Australia could face another price surge caused by supply and demand shocks. “Even in the most optimistic scenario, LNG imports to Australia are becoming unavoidable,” he said.
In light of the looming crisis, energy policy is expected to take center stage in upcoming elections, where the ruling Labor Party’s renewable energy goals will be contested by the opposition’s proposal for nuclear power plants. Meanwhile, the Victorian government is pushing for the Australian Energy Market Operator to act as an anchor buyer of LNG. Several companies, including Andrew Forrest’s Squadron Energy, Viva Energy Group, and Royal Vopak NV, have already proposed LNG import terminals to address the impending shortages.
While Australia would not be the first major gas exporter to rely on imports—countries like Egypt and Indonesia have resorted to importing LNG due to rapidly growing domestic demand—experts are still surprised by the shift. Saul Kavonic, an energy analyst at MST Marquee, expressed disbelief at the situation, stating, “It is ridiculous that one of the world’s largest gas exporters is looking to import gas.” He pointed out that while there is still significant gas available in Queensland, pipeline and storage limitations are hindering the ability to meet demand in the southern states when it’s needed most.
As Australia’s energy challenges deepen, the question of how to balance domestic needs with its role as a major LNG exporter will become increasingly urgent.
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