Investors in S&P/ASX 200 Index (ASX: XJO) energy shares will want to keep a close eye on the latest supply and demand dynamics unfolding in Australia's gas markets.
The big Aussie energy producers have struggled this year amid concerns a potential over supply of crude oil could see Brent crude prices averaging less than US$80 per barrel in the second half of 2024. Brent is currently trading for US$86 per barrel.
A bit over midway through 2024, Santos Ltd (ASX: STO) is the only one of the big three ASX 200 energy shares in the green, with shares up 2.6% year to date.
Woodside Energy Group Ltd (ASX: WDS) shares are down 8.5% over this period, while the Beach Energy Ltd (ASX: BPT) share price has dropped 8.2%.
While the outlook for crude supply and demand remains uncertain, it's looking increasingly likely that domestic demand for gas will outstrip supply as soon as 2027.
Here's what we know.
ASX 200 energy shares may be tapped to increase supplies
As you're likely aware, Australia ranks among the world's top LNG exporters, following the United States and Qatar.
But more of that export gas may have to be diverted to ensure sufficient domestic supplies. And more supplies will need to be brought online to avoid looming shortfalls. That's according to the Australian Competition and Consumer Commission's latest gas enquiry report.
According to the ACCC:
While there is forecast to be an overall surplus next year, there is a risk of a shortfall in the third quarter when demand for energy is typically higher due to demand for heating in winter. The risk has reduced with the extended operation of Eraring Power Station.
The report notes that the Australian Capital Territory, New South Wales, South Australia, Tasmania and Victoria will all depend on gas piped in from Queensland to avoid local shortfalls in the second and third quarters of 2025. And from 2029, Queensland will also require new sources of supply.
The ACCC said this emphasised "the need for sufficient gas pipeline and storage capacity, in addition to gas production".
And in an indication that ASX 200 energy shares could be encouraged to increase production and bring new gas project online, the ACCC noted:
Forecasts indicate that the east coast gas market may experience gas supply shortfalls as early as 2027 unless new sources of supply are made available. This predicted shortfall is likely to take place one year earlier than what previous reports have forecast.
The report pointed to "delays in new gas projects" and higher-than-expected gas consumption to generate power as driving the looming gas crunch.
