AEMO outlook released: APPEA claims no need for export controls By Martin Kovacs, 15 Jun 2017

The Australian Energy Market Operator (AEMO) has released its inaugural Energy Supply Outlook (ESO), stating that, based on the generation and storage expected to be available, it expects that over the next two years all National Electricity Market regions will meet the reliability standard set in the National Electricity Rules.

AEMO, however, found that there is “still a risk of electricity supply falling short of demand, especially in extreme conditions”.

“Following the release of our Gas Statement of Opportunities in March this year, the ESO analysis suggests gas supply remains tight, however the latest industry projections of gas production are just sufficient to meet current projections of gas demand,” AEMO Chief Executive Officer Audrey Zibelman commented.

“Gas availability on the supply side, together with new initiatives to reduce peak demand via demand side management, will form a formidable combination in managing power system security during those hours on the very few extreme condition days per year.”

The Australian Petroleum Production & Exploration Association (APPEA) has stated that the ESO “confirms that there is no need for the Commonwealth to restrict Queensland’s LNG exports”.

“The ESO is only a partial update of the March 2017 Gas Statement of Opportunities (GSOO),” APPEA Chief Executive Dr Malcolm Roberts commented. “It does not capture new gas supply announced after 1 May, such as Arrow’s Tipton Fields project, and, inexplicably, does not revise the high forecasts of LNG demand for gas. The ESO shows that actual demand for gas from the LNG projects to date is significantly lower than the March 2017 forecast.

“The government is rushing the introduction of the Australian Domestic Gas Security Mechanism (ADGSM) to commence on 1 July when the ESO shows there is no need to restrict Queensland’s LNG exports.

“The threat to tear up export contracts was prompted by the March 2017 forecast of a gas shortage. But AEMO’s revised forecast shows production will be sufficient to meet demand. The ADGSM is a sovereign risk issue for Australia. It undermines our reputation as a safe place to invest.”

Roberts stated that tightening supply has seen the market responding.

“In recent months, the industry has announced new projects to boost gas production, showing its commitment to providing secure and reliable energy,” he commented.