The Australian Energy Regulator’s (AER) Q3 2024 report provides a comprehensive analysis of the East Coast gas market, focusing on key trends in domestic prices, demand, storage, transportation, and international pricing. The findings are based on AER’s evaluation of East Coast gas market data, the Gas Bulletin Board, and Argus media data.
Gas prices on the East Coast decreased by 9% during Q3, with an average price of $12.51 per gigajoule (GJ). Following a volatile period in June, prices stabilized in July, despite elevated winter demand. Warmer weather in August further alleviated demand pressures, allowing for the replenishment of gas storage at the Iona facility and contributing to continued price reductions into September. A decline in Gas-Powered Generation (GPG) demand, particularly in southern states, also played a role in easing prices. This trend of price reductions between Q2 and Q3 has been typical since 2021, as colder temperatures in southern regions become less extreme in August.
Daily spot market prices peaked at the beginning of July, with Adelaide recording the highest price at $20/GJ on 2 July. However, warmer conditions by mid-August resulted in lower demand, with prices ranging between $10.34/GJ and $12.68/GJ, averaging $11.85/GJ for the remainder of the quarter. Increased gas storage levels helped reduce market vulnerability, lessening the need for gas transportation from Queensland to southern markets. Consequently, the Australian Energy Market Operator (AEMO) revoked its system security threat notice on 23 August, signalling reduced supply risks for the rest of the quarter.
Gas demand saw a marginal increase during Q3 but remained lower than in previous years due to warmer-than-usual winter conditions, similar to trends observed in 2023. Peak demand occurred in early August, exceeding 1.5 petajoules (PJ) per day, but levels declined significantly by mid-August, with average daily demand falling to just under 936 terajoules (TJ). Reduced demand was also influenced by the winding down of the gas-powered Tamar Valley power station in Tasmania, which was offset by increased hydro generation.
Iona’s gas storage levels were under pressure at the start of Q3, with significant volumes withdrawn to meet winter demand. However, warmer weather in July allowed participants to replenish storage levels, which exceeded 12 PJ by the end of the quarter. This improvement in storage levels contributed to AEMO’s decision to cancel its system security threat notice ahead of the projected 30 September date.
Gas flows from Queensland to southern markets remained strong in July, delivering close to 10.1 PJ of gas. However, as demand waned in August, these flows decreased, with some reversal of flows back into Queensland. Utilization of pipeline capacity through the Day Ahead Auction (DAA) reached a record 37 PJ in Q3, marking a 5.5 PJ increase from the same quarter in 2023. A significant change in auction behaviour was noted, with capacity increasingly shifting northward from August onwards.
International LNG prices in Asia remained elevated throughout Q3 due to prolonged heatwaves across Japan, South Korea, and southern China, which increased demand for gas-powered generation to meet cooling requirements. The Argus Northeast Asia (ANEA) LNG price fluctuated between AUD $16.08 and AUD $19.44, averaging AUD $17.80 by the end of the quarter. In Europe, milder weather and cheaper prices helped increase gas storage levels, with inventories reaching 90% capacity by August.
Short-term gas contract volumes surged during Q3, with 75.2 PJ of gas traded, nearly double the volume from Q3 2023. Of this, 43.8 PJ was contracted for delivery in 2025, indicating increased activity in securing supply for the upcoming year. The volume-weighted average (VWA) price for 2025 contracts fell by over $1/GJ to $14.09/GJ, reflecting a shift towards lower-priced contracts.
Overall, Q3 2024 saw an easing of market pressures due to warmer weather and increased gas storage levels, leading to lower prices and reduced demand. Gas contract volumes for 2025 increased, and forward prices fell, suggesting a more stable outlook for the East Coast gas market as it moves into the final quarter of the year.