Since 2000 there has been increasing development of infrastructure to connect and move gas between east-coast states. At the same time, Queensland has seen the rapid growth of coal seam gas (CSG) developments and the establishment of a liquefied natural gas (LNG) export industry.
Most eastern Australian submarkets are now served by multiple basins and pipelines. The Queensland – South Australia – New South Wales (QSN) Link pipeline between Ballera and Moomba, which started operation in February 2009, physically links Queensland supply to the southern states.
Queensland is now also connected to the Northern Territory via the Northern Pipeline between Tennant Creek (NT) and Mount Isa (Qld) which commenced operations in January 2019.
With the development of 3 LNG export facilities at Gladstone, sellers have an option where to sell their gas. If they sell to an LNG facility they may receive a 'netback' price that is the offshore price less the cost of processing and transport. This 'netback price' influences the price paid for gas in the domestic market and has made domestic gas prices more consistent with global markets.
Short-term wholesale gas trading
One domestic reform that has contributed to market growth, depth and liquidity is the Short Term Trading Market (STTM). The STTM is a wholesale gas market, linking transmission pipelines and distribution systems, that supports short-term trading between gas shippers, retailers and large customers at a defined hub.
The Australian Energy Market Operator (AEMO) uses participant bids and offers to schedule deliveries and withdrawals from gas pipelines at the hub for the next gas day.
STTM hubs operate in Brisbane, Adelaide and Sydney.
Gas supply hub
AEMO implemented a Gas Supply Hub (GSH) at Wallumbilla in March 2014, with support from the Energy Council.
The GSH is an exchange for the wholesale trading of natural gas. It is an interconnection point for the Surat–Bowen Basin, linking gas markets in Queensland, South Australia, New South Wales and Victoria.
It was introduced to enable improved wholesale trading for an east-coast gas market affected by significant LNG exports in Queensland.
Through an electronic platform, GSH participants can trade standardised, short-term physical gas products at each of the 3 foundation pipelines connecting at Wallumbilla. AEMO centrally settles transactions, manages prudential requirements and provides reports to assist participants in managing their portfolio and gas delivery obligations.
The GSH promotes transparent and efficient gas trading, allowing participants to manage the risks associated with variable gas prices. It also deepens market liquidity by attracting participants such as LNG exporters, industrial customers and gas-powered generators. Some data on volumes traded and prices is compiled by the Australian Energy Regulator (AER).
Gas market regulators
Australian Energy Market Commission
The Australian Energy Market Commission (AEMC) is the rule maker for Australian electricity and gas markets. It makes and amends the National Electricity Rules, National Gas Rules and National Energy Retail Rules. It also provides market development advice to governments. It has information on the gas supply chain and gas markets, and it holds a gas pipeline register.
Australian Energy Regulator
The Australian Energy Regulator (AER) regulates electricity networks and some gas pipelines, in all jurisdictions except Western Australia. It sets the amount of revenue that network businesses can recover from customers for using these networks.
It enforces the laws for the National Electricity Market and spot gas markets in southern and eastern Australia. It monitors and reports on the conduct of market participants and the effectiveness of competition. It also publishes the State of the Energy Market report.
Australian Energy Market Operator
The Australian Energy Market Operator (AEMO) manages and operates the east coast electricity and gas markets, including hosting gas market systems such as the gas supply hub, STTM, and the Gas Market Bulletin Board. They are also responsible for maintaining a secure gas supply and for contributing to the design of Australia's future energy system.
The GasFields Commission is a Queensland body that manage and improve the sustainable coexistence of landholders, regional communities and the onshore gas industry in Queensland.
The Australian Competition and Consumer Commission (ACCC) is another significant stakeholder. The ACCC is conducting an important inquiry into the gas industry and its regular interim findings are an important guide for policy development.