Gas consumption in Eastern Australia has declined in the past year due to a surge in electricity supply from grid-scale battery storage, according to a report by the Institute for Energy Economics and Financial Analysis.
Total gas consumption for financial year 2025-26, excluding export LNG, was 6% below the prior year, according to the report, with gas demand for power generation falling by 24 petajoules.
This decline has coincided with a drop in domestic gas supply, which has fallen by more than 7% year-over-year to 214 PJ, while exports continued to rise, at 645 PJ, an increase of 61 PJ over the same period.
The domestic market took 23% of eastern Australia's gas production during the first half of the year, down from 25% a year earlier, the lowest since 2019.
The report attributed this to a combination of higher prices linked to LNG exports, government electrification policies and the growing presence of renewable energy and battery storage across the region.
The report highlighted Santos' Gladstone LNG project, or GLNG, which has purchased more than 1,000 PJ of gas from the domestic market since 2017, equivalent to more than two years of domestic demand.
IEEFA said GLNG now has sufficient reserves to meet its contractual commitments, potentially allowing it to reduce third-party purchases if it proceeds with plans to build those reserves further.
Australia's federal government is designing a gas reservation policy aimed at ensuring sufficient domestic supply and putting downward pressure on prices.
IEEFA said the policy's design would be crucial to its effectiveness, particularly in determining whether GLNG could continue exporting gas purchased from the domestic market.