Category Intelligence Natural Gas Market in Australia
Enhancing Supply Chain Management and Risk Management

Natural Gas Market Overview in Australia

The natural gas market in Australia is experiencing growth, fuelled by increasing demand from various sectors such as industrial production, energy, and manufacturing. Australia’s abundant natural gas reserves, particularly in the Bass Strait region, are key contributors to both the domestic market and the country's significant role as a major LNG exporter. The market is being shaped by advancements in technology aimed at improving extraction processes, sustainability, and cost-efficiency. . Additionally, we address future procurement challenges and emphasize the importance of digital procurement tools in accurately forecasting market needs to keep clients ahead in this dynamic landscape. Strategic sourcing  and procurement management  play a crucial role in streamlining the procurement process for Natural Gas  development. As competition intensifies, companies are leveraging market intelligence solutions and procure analytics  to optimize their supply chain management systems.

The natural gas market in Australia is projected to reach a size of approximately USD 9.5 billion by 2032, with a compound annual growth rate (CAGR) of 4.5% from 2024 to 2032. This growth is driven by rising demand in both the domestic and international markets.

Sector Contributions:

• Industrial Sector: The industrial sector, including power generation and manufacturing, is the largest consumer of natural gas in Australia, making up over 50% of total demand. Natural gas is crucial for its use in electricity generation and as a feedstock for chemical production.


• Energy Production: As part of Australia’s energy transition, natural gas is increasingly being used to replace coal-fired power plants due to its lower carbon emissions, which supports cleaner energy generation.

Key Trends and Sustainability Outlook

• Technological Transformation and Innovations: Advances in natural gas extraction technologies, including hydraulic fracturing and horizontal drilling, are enhancing the efficiency and yield of gas production in Australia. In addition, supplier performance management and vendor performance assessment are becoming critical for companies to navigate the competitive landscape, optimize supply chains, and meet stringent environmental regulations


• .Energy Transition: Natural gas is playing an essential role in Australia’s energy transition by providing a cleaner alternative to coal, which is crucial for meeting emissions reduction targets and expanding renewable energy usage.


• Domestic and Export Demand: Australia continues to strengthen its position as a major LNG exporter, driving the growth of the natural gas market. At the same time, domestic consumption is increasing, especially in sectors like energy production and industrial heating.

Growth Drivers

• Sustainability Initiatives: The push toward reducing carbon emissions and increasing the share of cleaner energy sources in the grid is enhancing the role of natural gas as a transition fuel.


• Infrastructure Development: Continued investment in natural gas infrastructure, such as pipeline expansion and LNG plant development, ensures a reliable and efficient supply both domestically and for export.


• Global Market Demand: Australia remains a leading exporter of LNG, and global demand for cleaner energy sources continues to rise, supporting growth in the natural gas sector

Overview of Market Intelligence Services for the Natural Gas Market in Australia  Market

Australia's natural gas market is on a steady growth trajectory, supported by technological advancements, increased domestic demand, and its status as a major LNG exporter. Ongoing infrastructure investments and the focus on energy transition will continue to drive this growth, making natural gas a key component of Australia’s future energy landscape.

Procurement Intelligence for Natural Gas Market in Australia: Category Management and Strategic Sourcing
"To stay ahead in the Australian natural gas market, companies are optimizing procurement strategies, leveraging spend analysis solutions for vendor spend analysis, and enhancing supply chain efficiency through supply market intelligence. Procurement category management and strategic sourcing are becoming vital in achieving cost-effective procurement and ensuring timely availability of natural gas to meet industrial and domestic demands."

Australia Natural Gas Market Pricing Outlook: spend analysis

The Australian natural gas market is seeing significant price fluctuations driven by supply-demand dynamics, regulatory measures, and seasonal factors.

Price Forecast:

• Supply & Demand: The east coast is forecast to have a 27 PJ surplus in 2024, but southern states may face shortages, particularly in winter​


• Price Trends: Gas prices surged to nearly $50 per GJ in 2023 before falling to $12–20 per GJ. The price cap remains effective, with retail prices averaging $20 per GJ​

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Competitive Strategies:

• Companies are securing long-term contracts and focusing on improving efficiency to manage costs​

Cost Breakdown for the Natural Gas Market in Australia : cost saving opportunities

1. Production and Supply Costs (40%)

• Description: These costs refer to the expenses related to the extraction and delivery of natural gas from production sites to the domestic market. This includes exploration, drilling, and transportation expenses.


• Trends: Production costs have seen fluctuation due to market conditions, including regulatory changes and investment in new extraction technologies. The Australian government is also focused on ensuring long-term supply by incentivizing the development of new fields, particularly as supply shortages are projected from 2027 onwards

1. Maintenance and Support Costs (XX%)

• Description: XX


• Trends: XX

1. Cash Management Costs (XX%)

• Description: XX


• Trends: XX

1. Technology and Software Costs (XX%)

• Description: XX


• Trends: XX

Cost-Saving Opportunities: Negotiation Lever and Purchasing Negotiation Strategies

In the Australian natural gas market, key cost-saving opportunities focus on optimizing procurement and operational strategies. Forming strategic vendor partnerships and securing long-term Gas Supply Agreements (GSAs) allows for better pricing and stability, particularly as new regulations promote transparency and competitive pricing. Additionally, investments in LNG import terminals and pipeline infrastructure can help reduce transportation costs and ensure long-term supply security, addressing potential shortages by 2027. Demand management through energy efficiency initiatives also plays a role in lowering overall gas demand, which helps reduce costs across sectors. Lastly, the integration of data analytics into operations helps optimize gas forecasting, supply chain management, and pricing strategies, ensuring more cost-effective operations

Supply and Demand Overview of the Natural Gas Market in Australia: Demand-Supply Dynamics and Buyer Intelligence for Effective Supplier Relationship Management (SRM)
The Australian natural gas market is experiencing steady growth driven by increasing domestic demand, the expansion of LNG exports, and significant investments in infrastructure. Demand is particularly high due to the need for energy to support industrial activities, power generation, and transportation. Additionally, the market is supported by collaborations between government bodies, energy companies, and international partners to secure long-term supply agreements. As a result, effective supplier relationship management is crucial in navigating the competitive landscape and ensuring a reliable and cost-efficient gas supply.

Demand Factors:

1. Industrial Demand: The industrial sector, particularly mining, manufacturing, and power generation, is a key driver of natural gas demand in Australia. These industries depend on natural gas for energy and raw materials.


2. Residential and Commercial Use: Natural gas remains a primary energy source for heating, cooking, and hot water in Australian homes and businesses. Demand continues to be strong in these sectors.


3. Export Demand: Australia's natural gas exports, especially liquefied natural gas (LNG), play a significant role in shaping demand. Growing export markets, particularly in Asia, increase local demand for gas.


4. Energy Transition: As Australia shifts toward cleaner energy, natural gas is seen as a transition fuel, leading to higher demand for natural gas in power generation to complement renewable energy sources.

Supply Factors:

1. Abundant Natural Gas Reserves: Australia is home to vast reserves of natural gas, particularly in Western Australia, Queensland, and the Northern Territory, which support both domestic and export markets.


2. Infrastructure Development: Australia's extensive pipeline and LNG infrastructure ensures efficient transportation and export of natural gas, contributing to supply stability.


3. Competitive Market Landscape: The market is competitive with multiple domestic and international companies involved in production and distribution, driving innovation and competitive pricing.


4. Regulatory Oversight: The regulatory environment in Australia ensures fair pricing and stable supply by promoting investment and maintaining operational standards across the industry.

Regional Demand-Supply Outlook for the Australian Natural Gas Market:

Australia's natural gas market benefits from several key factors:

1. Strong Domestic Demand: Continued reliance on natural gas in industrial and residential sectors, combined with robust demand for LNG exports, ensures sustained market growth.


2. Investment in LNG Infrastructure: Expanding LNG export capacity is a major focus, with ongoing investments in facilities like the Gladstone LNG project and pipeline networks boosting supply.


3. Regulatory Support: A supportive regulatory framework fosters stability in the supply chain and encourages investment in infrastructure and production.


4. Energy Transition Pressures: While natural gas remains critical in Australia’s energy mix, competition from renewable energy sources may limit long-term growth. However, gas will continue to play a key role in supporting renewables.


5. Sustainability and Environmental Considerations: Natural gas producers are adopting more sustainable practices, such as reducing methane emissions and improving energy efficiency, to meet environmental standards and maintain market demand.

Supplier Landscape: Supplier Negotiations and Strategies in the Natural Gas Market in Australia
The supplier penetration in the Australian natural gas market is significant, with a growing number of global and regional players involved in the extraction, distribution, and export of natural gas. These suppliers play a crucial role in the overall market dynamics, affecting pricing, innovation in extraction technology, and energy accessibility. The market is highly competitive, with suppliers ranging from large multinational energy companies to specialized regional players focused on LNG production and distribution.

Currently, the supplier landscape is characterized by consolidation among top-tier energy companies that dominate the market share. However, emerging companies and smaller players are expanding their footprint by focusing on efficient production methods, new distribution networks, and collaborations with international partners to tap into growing demand, especially in the Asia-Pacific region.

Some of the key suppliers in the Natural Gas Market in Australia include:

1. Woodside Energy


2. Santos Ltd.


3. Origin Energy


4. Beach Energy


5. Chevron Australia


6. Shell Australia


7. BHP


8. QGC (Queensland Gas Company)


9. Arrow Energy (Shell & PetroChina joint venture)


10. Exxon Mobil Australia

Key Development : procurement category significant development