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Summary

NSW businesses and consumers face the risk of constrained gas supply and higher prices in the absence of a growing local gas industry, according to new research released today by Santos.

The analysis, prepared by ACIL Tasman, identifies two fundamental drivers that are changing the gas supply market across eastern Australia:

  • Growing gas demand, including for electricity generation driven by the introduction of a carbon price; and
  • The emergence of a large-scale LNG industry in Queensland.

The report finds:

  • New South Wales currently imports 95% of the gas it consumes;
  • The majority of contracts for the supply of gas to 1.1 million NSW consumers will expire within the next five years;
  • Development of a NSW gas industry to a level that makes NSW largely self-sufficient for gas will potentially add billions of dollars to Gross State Product over the period to 2035.

The report finds that as early as 2017, NSW’s traditional sources of gas from South Australia, Victoria and Queensland will increasingly be used to meet rising demand from both Queensland LNG projects and gas-fired electricity generation.

Santos Vice President Eastern Australia James Baulderstone said the ACIL Tasman report would help contribute to an informed public debate about NSW future energy security needs.

“This report highlights that NSW must either develop its own indigenous sources of gas supply, or confront the real prospect of constrained supply and consequently higher gas prices,” Mr Baulderstone said.

“In turn, the safe and environmentally responsible development of NSW’s gas resources will generate billions of dollars in additional economic benefit and underpin employment in rural and regional communities as well as industries that rely on gas.

“Enabling this sustainable development to occur is the best way to ensure all energy users in NSW, including the state’s manufacturing base, have access to reliable and affordable supplies of natural gas.”