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Australia’s southeast faces gas crunch through Sept -market operator

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MELBOURNE — Australia’s most populous states face a gas shortfall until the end of September, the country’s energy market operator said on Tuesday as it began talks with liquefied natural gas (LNG) exporters to help fill the gap.

The Australian Energy Market Operator (AEMO) issued a notice on Tuesday saying it had identified a gas supply shortfall “trigger event” for the states of Victoria, New South Wales, South Australia and Tasmania from July 19 to Sept. 30.

This is only the second time, following a similar event in June, that the market operator has had to invoke the so-called Gas Supply Guarantee, which allows it to press LNG exporters in Queensland state to divert gas to the domestic market.

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The three east coast LNG plants the market operator turns to are run by Shell Plc, ConocoPhillips and Santos.

The shortage has arisen due to much higher than normal demand for gas for power generation amid a number of outages at coal-fired plants at the same time as a cold snap has hit the southeastern states, which need gas for home heating.

The high demand has resulted in rapid depletion of the Iona gas storage facility in Victoria, AEMO said.

“At this stage, there is no impact to gas supply in Victoria,” the market operator said in an emailed statement. Victoria is the biggest gas-consuming state in Australia.

“AEMO expects the gas supply guarantee and threat to system security mechanisms to need to remain in effect until 30 September 2022 or until gas supplies are sufficient and the threat to gas supply caused by Iona storage inventory depletion has subsided,” AEMO said.

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It asked market participants to stop buying gas from the Victorian wholesale market to sell to other states on July 11, but said storage levels had continued to drop over the week.

On Tuesday market participants were told to avoid buying gas for generation in order to avert gas curtailments during peak demand days this winter.

Last month, the energy crisis was so bad, with gas and power prices soaring, that the market operator suspended the wholesale electricity market for 10 days.

“The situation in both gas and electricity remains fragile, and many risk factors still persist,” AEMO Chief Executive Officer Daniel Westerman said in a speech on Tuesday.

(Reporting by Sonali Paul; Editing by Susan Fenton)

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