Australia, historically one of the world's leading exporters of liquefied natural gas (LNG), is confronting an ironic and pressing challenge: the prospect of importing LNG to meet domestic energy demands as early as next year.
This development underscores the complexities of global energy markets and raises questions about the nation's energy strategy.
Declining Domestic Gas Production
The Australian Energy Market Operator (AEMO) has consistently warned of impending gas shortages, particularly in the southeastern states. The primary contributor to this looming deficit is the accelerated depletion of the Bass Strait gas fields, which have traditionally been a cornerstone of Victoria's gas supply.
AEMO's forecasts indicate that southern Australia's gas output is projected to decline by 40%, from 1,260 terajoules per day (TJ/d) in 2024 to 740 TJ/d by 2028 (Argus Media, 2025).
LNG Import Terminals
In response to the anticipated shortfall, several LNG import terminal projects have been proposed -
Port Kembla Energy Terminal (New South Wales) - Developed by Squadron Energy, this terminal is poised to commence operations and could supply up to 2.4 million tonnes per year, sufficient to meet New South Wales entire winter demand of approximately 481 TJ/d, excluding gas-fired power generation (Argus Media, 2025).
Geelong LNG Import Facility (Victoria) - Viva Energy's proposed terminal aims to address Victoria's forecasted gas shortages. However, the project has encountered delays due to incomplete risk assessments related to shipping impacts, as highlighted by Ports Victoria. The state government is expected to make a decision by March 2025 (Packham, 2025).
Venice Energy's LNG Import Project (South Australia) - AG&P LNG, set to acquire Venice Energy, is exploring interim solutions to Australia's projected gas shortfall by 2026. The company has proposed using LNG 'iso' tanks to import and distribute gas directly from Dubai, aiming to alleviate immediate supply issues, especially for smaller users reliant on the spot market (Packham, 2025).
Economic Implications of LNG Imports
Transitioning from a net exporter to an importer of LNG carries significant economic ramifications -
Increased Energy Costs - LNG imports are estimated to be up to 25% more expensive than domestically sourced pipeline gas. The Argus assessment for month-ahead spot gas deliveries to Victoria averaged A$12.46 per gigajoule (GJ) in 2024, while the Argus Gladstone free-on-board price a netback indicator for LNG delivered to the Asia-Pacific averaged A$16.03/GJ for the same period (Argus Media, 2025).
Inflationary Pressures - Higher energy costs could contribute to inflation, affecting both consumers and industries. Analysts have warned that reliance on imported LNG may lead to increased utility bills and broader economic impacts.
Global LNG Market Dynamics
Supply Surge - Between 2025 and 2028, global LNG capacity is projected to increase by approximately 40%, primarily driven by expansions in the U.S. and Qatar. This influx is expected to intensify competition among exporters and exert downward pressure on LNG prices (Runciman and Morrison, 2024).
Demand Uncertainties - While supply is set to rise, demand growth, especially in emerging markets, remains uncertain. Factors such as policy shifts towards renewable energy and economic conditions could influence LNG consumption patterns (Runciman and Morrison, 2024).
In conclusion, Australia's potential shift from an LNG export powerhouse to an importer highlights the dynamic nature of global energy markets and the imperative for adaptive, forward-thinking energy policies.
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References –
Argus Media (2025). Viewpoint: Australia edges towards LNG imports in 2025. [online] Argusmedia.com. Available at: https://www.argusmedia.com/en/news-and-insights/latest-market-news/2644462-viewpoint-australia-edges-towards-lng-imports-in-2025.
Packham, C. (2025). Viva Energy yet to complete vital works on LNG project, Ports Victoria claims. [online] Theaustralian.com.au. Available at: https://www.theaustralian.com.au/business/mining-energy/viva-energy-yet-to-complete-vital-works-on-lng-project-ports-victoria-claims/news-story/7e294486b48fffa5c3a76e4948874b5c.
Runciman, J. and Morrison, K. (2024). The future of Australian LNG. [online] ieefa.org. Available at: https://ieefa.org/resources/future-australian-lng.
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