Industry: Chemicals and Materials
Published Date: June-2024
Format: PPT*, PDF, EXCEL
Delivery Timelines: Contact Sales
Number of Pages: 326
Report ID: PMRREP33430
The Australia market for natural gas is valued at US$24.83 Bn in 2024 and is predicted to expand at a CAGR of 2.9% to reach US$33.1 Bn by the end of 2033.
Key Highlights of the Market
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Report Attributes |
Details |
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Market Size (2024E) |
US$24.83 Bn |
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Market Estimation (2033F) |
US$33.1 Bn |
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Forecast Growth Rate (CAGR 2024 to 2033) |
2.9% |
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Historical Growth Rate (CAGR 2019 to 2023) |
2.7% |
Australia plays a significant role in the global natural gas market. It is a major exporter of liquefied natural gas (LNG), particularly to Asian countries looking to reduce reliance on coal. Australia's LNG exports contribute to global energy security.
However, there are challenges. Australia is facing a domestic gas shortage due to factors like cold weather and increased reliance on renewables. This highlights the difficulty of balancing transitioning to clean energy with ensuring a stable energy supply.
The Australian government supports natural gas as a transition fuel until renewables can fully meet demand. This approach is controversial as some argue that gas is environmentally harmful.
Natural gas is a critical energy source for residential and industrial purposes, providing heat and electricity to millions worldwide. It is also used as a feedstock in the production of various products such as fertilizers, plastics, and chemicals.
Extraction and transportation of natural gas can still have significant environmental impacts just like non-renewable energy sources, particularly regarding water usage, land disturbance, and methane leakage.
There is thus a growing pressure on the entire natural gas industry to reduce its environmental impact, and transition towards cleaner energy sources.
From 2019 to 2023, the consumption of natural gas in Australia increased at a CAGR of 2.7%. Domestic consumption of natural gas and the growing demand from Asian markets are key driving forces behind the growth of the market.
The Australia natural gas market outlook in the next ten years looks moderate, yet steady. According to Persistence Market Research’s analysis, demand for natural gas in Australia is projected to increase at 2.9% CAGR from 2024 to 2033.
Continued market growth is expected due to ongoing domestic demand, increased use of natural gas in power generation, and growing demand from industries such as chemicals, fertilizers, and transportation.
Factors such as the shift towards cleaner energy sources and stringent environmental regulations will also drive the demand for natural gas, especially in transportation, and industrial sectors.
However, the natural gas demand growth could be impacted by factors such as fluctuations in global energy prices, technological advancements, and changes in government policies and regulations.
Currently, Australia's eastern states are facing a gas shortage due to a cold snap raising demand for heating and power. This coincides with unplanned maintenance at the Longford gas plant, a major supplier for the southeastern region.
The Australian Energy Market Operator is urging gas producers in Queensland to send supplies south to meet the shortfall.
High Demand for Natural Gas as an Alternative Fuel
Increasing use of natural gas as an alternative fuel in various applications is driving its demand in Australia.
One of the significant reasons behind this demand is the low environmental impact of natural gas compared to conventional fuels.
The existing natural gas distribution system in Australia makes it easy to access natural gas as a domestically produced gaseous fuel.
The country's position as the world's largest producer of liquefied natural gas (LNG) also makes it an attractive option for those concerned about fuel supply security and cost.
The Energy Network Australia reports that the natural gas is becoming more popular as an alternative fuel for transportation in the world, with 16.7 million natural gas vehicles (NGVs), and around 3,000 compressed natural gas (CNG) vehicles currently in use across the country.
Fleet operators also prefer natural gas as a fuel source due to its cost-effectiveness, lower environmental impact, and wide availability through the existing natural gas distribution system.
Natural gas is in high demand all over Australia as an alternative source of energy and thus crafts a sizeably large market.
Investments Flowing into Australia Natural Gas Market
Expansion plans in the Australia market for natural gas in present a variety of potential benefits beyond increased export potential, job creation, improved energy security, increased investments, and environmental benefits.
The development of the industry may require the construction of new infrastructure, such as pipelines and liquefaction facilities, providing new business opportunities for construction and engineering firms.
To remain competitive in the global natural gas market, Australian companies may also need to invest in new technology and innovation, leading to the development of more efficient extraction and production methods and advancements in transportation technology.
Expansion plans could also lead to the negotiation of new international trade agreements, increasing market access for Australian natural gas producers, and creating new, long-term trading partnerships.
Chevron Corp has plans to expand its liquefied natural gas (LNG) operations by producing LNG in Western Australia, Angola, and Equatorial Guinea on December 20, 2022.
In addition, the company intends to boost production in other regions, including the US, and the Eastern Mediterranean, to widen the distribution of LNG.
The growth of the industry could have a positive impact on Australia's overall economic growth, leading to increased tax revenue for the government, improved infrastructure development, and increased investment in other sectors of the economy.
A Clash with Australia’s Climate Change Goals
Australia aims for net zero emissions. Natural gas, though cleaner than coal, still emits greenhouse gasses. This clashes with the push for renewable energy sources like solar, and wind. Increased reliance on gas could hinder achieving climate goals.
Imbalance of Domestic Needs, and Exports
Australia has vast gas reserves. Exporters focus on selling Liquefied Natural Gas (LNG) overseas, fetching high prices.
This can lead to domestic gas shortages and price spikes, making gas less attractive for Australian consumers, as well as businesses.
The Rise of Newer Players Armed with Innovation
Traditionally, large companies have dominated gas exploration and production. However, with a growing focus on unconventional gas sources and a need for more flexible supply solutions, there is a space for new entrants.
These could be smaller, independent companies specializing in smaller-scale production of LNG, unconventional gas sources, and renewable gas integration.
Extracting gas from shale or coal seams requires different expertise than traditional methods. New players with this expertise could unlock new gas reserves.
Smaller, modular LNG plants could process gas closer to production sites, making it more accessible for domestic consumption without the high costs of large-scale export infrastructure.
Combining natural gas with renewable energy sources like biogas or hydrogen could create a cleaner, more sustainable gas network.
The shift towards new players, and innovative solutions could lead to a more secure and adaptable gas market that benefits both domestic consumers and the environment.
Methane Wins the Demand Game with a Majority of Share
Based on gas type, methane gas accounted for 90% market share in 2022. Natural gas is typically composed of multiple gases, including methane, ethane, propane, and butane.
Methane gas accounts for a significant proportion of the natural gas produced and consumed in Australia.
Methane gas is the primary component of natural gas, accounting for approximately 70-90% of its composition. It is a colorless, and odorless gas that is primarily formed from the decomposition of organic matter.
Methane gas is commonly found in coal beds, shale formations, and conventional natural gas reservoirs, and it is typically extracted using drilling techniques such as hydraulic fracturing.
In Australia, the prominence of natural gas production comes from conventional natural gas reservoirs, which primarily contain methane gas.
The natural gas reserves in Australia are in multiple regions, including the Northwest Shelf, Bass Strait, and Cooper Basin. These regions have contributed significantly to Australia's increasing role in the global natural gas market.
Methane gas is commonly used for a range of applications, including electricity generation, heating and cooling, and industrial processes. It is also used as a feedstock for chemicals, and fertilizers.
In recent years, there has been increasing interest in using methane gas as a transportation fuel, with the development of compressed natural gas (CNG) and liquefied natural gas (LNG) vehicles.
Methane gas is the primary component of natural gas, which is produced from conventional reservoirs in Australia. Methane gas is used for a wide range of applications and is likely to remain a critical component of the energy mix for the foreseeable future.
More than 50% of Produced NG Goes to Industrial Fuel Application
In Australia, industrial fuel application of natural gas accounted for 51% market share in 2022. Natural gas is a versatile and convenient energy source that can be used in various applications.
The industrial sector of the country accounts for a significant portion of the country's natural gas consumption.
Natural gas is used in the industrial sector for various purposes, including fuel for power generation, heating and cooling, and as a feedstock for chemicals, and fertilizers.
Natural gas consumption in the industrial sector has been increasing in recent years due to the expansion of the country's manufacturing and mining industries.
The manufacturing industry is one of the largest consumers of natural gas in Australia, using it as a fuel for the operation of boilers, furnaces, and other industrial equipment. Natural gas is also used in the production of metals, glass, and paper products.
The mining industry is another significant consumer of natural gas, using it for power generation and heating in remote mine sites. Use of natural gas in electricity generation has been increasing in Australia.
Natural gas-fired power plants are considered a cleaner and more efficient alternative to coal-fired power plants. The increasing use of natural gas in electricity generation has contributed to the country's efforts to reduce greenhouse gas emissions and transition towards a more sustainable energy mix.
Apart from the industrial sector, natural gas is also used in the residential and commercial sectors for heating and cooking purposes. The transport sector is also showing increasing interest in using natural gas as a transportation fuel, particularly in heavy-duty vehicles such as buses and trucks.
In conclusion, industrial fuel application is one of the dominant uses of natural gas in the Australian market.
Victoria Accounts for a Significant Share of Australia’s Natural Gas Production
Victoria accounted for a market share of 29.3% in 2022. One of the key reasons is the state's access to significant natural gas reserves. The Bass Strait fields, located off the coast of Victoria, have been producing gas since the 1960s, and the state also has other onshore and offshore gas reserves.
This abundant supply of natural gas gives Victoria a competitive advantage in the market, as it can reliably and cost-effectively supply gas to customers.
Victoria's location is also a significant factor in its dominance in the market. The state is strategically located close to significant demand centers, including Melbourne, and Sydney.
The spatial proximity makes it easier, and more cost-effective to transport natural gas to customers in these areas. Victoria has a well-developed infrastructure as well.
The state has invested in pipelines, processing facilities, and storage facilities, which enable efficient and reliable delivery of natural gas to customers across the state and beyond.
This infrastructure also helps ensure that Victoria's natural gas supply is secure, even during periods of high demand or disruptions in supply.
Massive investments by Victoria state in technology are also an important factor driving its dominance in the Australia natural gas market.
Victoria’s access to natural gas reserves, location, infrastructure, investment in technology, and government support have all contributed to its dominance in the market.
Leading manufacturers of Australia natural gas market account for a market share of 65% to 70%. With key players occupying a significant portion of the market, it is expected to become a consolidated market soon.
Prominent companies in the Australian market are constantly working to increase their production capacity and improve their product range.
Government regulations, particularly those related to environmental and safety standards, can have an impact on the competitive landscape of the market.
The competitive landscape can also be influenced by global trends and changes in demand, supply, and prices.
For instance:
June 2024
POSCO INTERNATIONAL's investment in its subsidiary Senex Energy is expanding natural gas production in Australia. The investment will triple production to 60 petajoules (PJ) by 2026. POSCO INTERNATIONAL will contribute AUD 300 billion (KRW 300 billion) to the project. Senex Energy has secured long-term contracts to sell the gas. The expansion is expected to significantly increase POSCO INTERNATIONAL's profit.
June 2024
Chevron is resuming full production at its Wheatstone gas facility in Australia. It discusses repairs to the platform's fuel gas system and the resumption of LNG and domestic gas production. The facility exports liquefied natural gas (LNG) to Japan, and South Korea.
December 20, 2022
Chevron started LNG production in Angola, Western Australia, and Equatorial Guinea, as part of the expansion of its liquefied natural gas business. The company increased LNG production in other regions, such as the US, and the Eastern Mediterranean, to expand its distribution network.
November 2022
Shell acquired significant value shares in renewable natural gas manufacturer Nature Energy, making it the largest RNG producer in Europe.
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Attribute |
Details |
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Forecast Period |
2024 to 2033 |
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Historical Data Available for |
2019 to 2023 |
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Market Analysis |
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Key Regions Covered |
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Key Market Segments Covered |
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Key Companies Profiled |
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Pricing |
Available upon Request |
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As of 2023, the Australia natural gas market was approximately US$24.8 billion.
The estimated value CAGR for the Australian natural gas market is 2.9% between 2024-2033.
Methane, based on gas type, is the leading market segment. By application, the industrial fuel segment dominates.
Victoria accounted for a market share of 29.3% in 2022. One of the key reasons is the state's access to significant natural gas reserves.
Gazprom, ExxonMobil Corporation, China National Petroleum Corporation, Royal Dutch Shell PLC, BP PLC, Chevron, and Total S.A. are some of the leading companies in this market.
