As Australia moves closer to the 2025 federal election on 3 May, the natural gas sector is once again at a crucial point. Rival energy policies are set to reshape markets and investment opportunities. Over the past decade, the industry has seen major shifts in supply and demand, driven by political decisions and regional policies. These shifts are expected to play a significant role in upcoming election discussions.
Since 2015, Australia’s natural gas landscape has been far from smooth. Liquefied Natural Gas (LNG) exports from Gladstone kicked off in 2015, sparking hopes for a “golden age” of gas. Instead, linking eastern Australia’s gas supply to unpredictable global markets pushed domestic prices higher, created supply shortages, hurt local manufacturers, and drove gas demand in the region to a low not seen in 25 years.
Meanwhile, Western Australia (WA) followed a different path by implementing a gas reservation policy. Producers were required to reserve part of their production for local use, insulating WA from the price fluctuations that hit the east coast. This policy provided WA with more stable supply and pricing, benefiting local industries and consumers.
The contrasting approaches between WA and the east coast have led to stark differences in how their markets behave. WA’s gas reservation policy has maintained a balance between exports and domestic consumption, with recent reports indicating that production will exceed demand through 2027. Increased output from LNG projects and lower short-term consumption have contributed to this robust outlook.
On the east coast, however, challenges persist. The Australian Competition and Consumer Commission (ACCC) forecasted a surplus of up to 110 petajoules in 2025, contingent on LNG producers exporting all uncontracted gas. Despite this, concerns remain about supply adequacy in the longer term as domestic demand evolves.
Energy policy has long been a contentious topic among Australia’s political parties.
The Liberal-Nationals Coalition supports a diverse energy mix that includes renewables, natural gas, and nuclear power. They aim to reduce energy costs, curb Government spending, streamline approvals for mining and resources projects, and limit regulatory hurdles. Their vision leans heavily on nuclear and natural gas to address Australia’s energy challenges, with less emphasis on renewables.
The Labor Party, led by Anthony Albanese, has focused on environmental reforms like establishing an Environmental Protection Agency (EPA) to tighten environmental oversight, which could impact approvals for gas projects. Though they support developments like the Beetaloo Basin, Labor has faced criticism for delaying decisions on significant projects like Woodside’s Northwest Shelf Project.
Unsurprisingly, the Australian Greens are advocating for a complete shift away from fossil fuels, favouring renewable energy investments and bold climate action to combat the crisis. They plan to phase out coal and gas projects altogether, replacing them with sustainable alternatives.
Federal approval delays have already affected key projects, including Woodside’s Northwest Gas Project. The government recently pushed back its decision on the project’s timeline, leaving its future uncertain until after the election. The Coalition has pledged to make a decision within 30 days if elected, promising a favourable outcome.
Both Labor and the Coalition support the Beetaloo Basin development in the Northern Territory, which is expected to supply low-CO2 gas to Darwin and the east coast. A pilot project is set to begin next year, with plans for full production later.
For investors, navigating these regional and political dynamics is no small feat. WA’s stable environment, backed by its gas reservation policy, offers more predictable returns, while the east coast’s exposure to global market fluctuations and regulatory uncertainty demands careful risk management. The outcome of the federal election adds another layer of complexity, as potential policy changes could reshape the sector’s future.
As Australia approaches this pivotal election, the natural gas sector faces profound challenges and opportunities. A decade of transformation, regional disparities, and competing political visions are creating a complex landscape for stakeholders. Investors must carefully weigh the risks and rewards, consider local market conditions, and stay attuned to possible policy shifts. The results of the election are likely to have lasting consequences, shaping everything from regulations to market stability and the broader direction of Australia’s energy strategy.
