Gas producers warn future shortfalls are almost inevitable as independent modelling shows Australia will have just enough to meet domestic needs this summer.
A projected surplus in the first quarter of 2024/25 has been wound down from at least five per cent to 2.5 per cent in the latest Australian Competition and Consumer Commission quarterly gas market report.
That minimum surplus - amounting to 12 petajoules - will be important to fill Victorian stores ahead of winter.
The federal government has just approved two drilling operations off the Victorian coast. (Dean Lewins/AAP PHOTOS)
It ran critically low in August after a spike in gas-powered electricity generation and lower production in the Gippsland basin.
At least 15PJ will be needed before May to secure the southern states' energy security in winter 2025.
The Albanese government on Friday approved two drilling operations off Victoria's coast to bring more gas to the east coast.
The Artisan and La Bella fields would help mitigate predicted shortfalls towards the end of the decade and could only go into the domestic market, helping reduce prices in Victoria and NSW, the resources minister said.
"We need to keep downward pressure on prices, shore up energy security and keep the lights on as we move to net zero," Madeleine King said.
The confirmation of the new wells should help lower Victorian gas bills, but some are sceptical. (Dan Peled/AAP PHOTOS)
Coalition senator Susan McDonald flayed the announcement.
"This is a weak attempt from the government to drown out the ACCC report, which is a damning report on Labor's gas market failures," she said.
"These fields are years away from production, and won't do anything to address the looming issues as highlighted by the ACCC and other market experts."
The domestic market troubles are occurring despite Australia rivalling Qatar as the world's largest gas exporter.
Natural gas is a key ingredient in Australia's electricity markets and manufacturing industry and is widely used for residential cooking and heating in Victoria.
It's also critical for mining operations in Queensland, Western Australia and the Northern Territory.
Australian Energy Producers welcomed the approval but warned more supply was needed, ahead of projected structural shortfalls from 2027.
The groundswell of voices in support of increasing gas supplies continues to grow. (Dean Lewins/AAP PHOTOS)
"The ACCC recognises the efforts of industry to ensure that additional gas is available during periods of peak demand," the group's chief executive Samantha McCulloch said.
"But without further exploration and development, future gas shortfalls are almost inevitable."
In a major blow for supply, seismic surveyor TGS abandoned its Otway Basin plans after environmental activists highlighted the potential impact on migratory whales and their food sources.
Ms McCulloch attacked that premise, saying seismic surveys were safe and used by the offshore wind industry.
"The Greens and activists want to stop all new gas developments, with no regard for the devastating impact on Australia's economy and energy security," she said.