Australia’s energy woes worsened as reports of an imminent energy crisis had Prime Minister Malcolm Turnbull twitching an itchy trigger finger. Forecasts indicate that the domestic gas shortages from next year could be three times greater than initially feared.

The Australian Energy Market Operator (AEMO) warned that the gas shortfall for 2018 could be up to 107 petajoules (PJ), or 17% of expected domestic consumption, and said it would back the Prime Minister if he was forced to “pull the trigger” by diverting export supplies from Queensland’s three coal seam LNG plants, operated by Santos, Origin and Shell, to domestic markets.

A separate report released by the Australian Competition and Consumer Commission (ACCC) said domestic users in southern Australia were confronting exorbitant gas prices as a direct consequence of the gas shortfall and lack of competition between suppliers.

The ACCC said in Queensland the benchmark spot price for gas was $5.87 per gigajoule and on the east coast of Australia it was $7.77.

Turnbull called a press conference in Sydney and warned that if the gas industry was unable to make up the shortfall, he would have no choice but to divert gas exports to the domestic market.

The Prime Minister’s view was echoed by Federal Treasurer Scott Morrison, who said a predicted 110 PJ supply shortfall would have to be met from Australia’s international annual export supply of 1300PJ.

Turnbull, who has called another meeting with gas industry executives to address the crisis, said: “We will not let the power bills of Australians rise further and further because of a shortfall of gas on the east coast of Australia.”

While praising the state of Queensland as “an honourable exception” for producing most of the east coast’s gas supplies, Turnbull blamed the crisis on New South Wales and Victoria state governments for onshore drilling bans and a failure to develop their own gas resources.

“We strongly encourage the NSW government to approve the development of the (Santos-led) Narrabri Gas Project, for example, which will add over 58 petajoules of gas per year. The sooner that this is brought online, that is critical to the energy security of Australia, the energy security of this state, NSW, which I might say imports 95% of the gas it uses, so it needs to produce more gas,” Turnbull said.

“Victoria is an even worse example where the Labor Government under Daniel Andrews has prohibited the export of gas onshore, regardless of whether it is conventional or unconventional. It is untenable for us to be facing gas shortages here on the east coast of Australia.”

AEMO Chief Executive Audrey Zibelman said the projected shortfall for 2018 is 54 PJ to 107 PJ and in 2019, 48 PJ to 102 PJ. Total projected domestic gas demand is 642 PJ in 2018 and 598 PJ in 2019.

Australia Petroleum Production and Exploration Association (APPEA) Chief Executive Officer Malcom Roberts said the “much more pessimistic” AEMO report was concerning, marking an abrupt change from its previous release six months ago.

“Over recent months, the industry has increased substantially the flow of gas to the domestic market. As the ACCC notes, the LNG projects will contribute more gas to the domestic market in 2018 than they ‘take out’. Queensland is now meeting its domestic and export demand almost entirely from local supply. Queensland gas is being sold in southern markets,” Roberts said.

Roberts said AMEO’s “analysis reinforces how vital it is for all governments to support developing new gas supplies as quickly and as cheaply as possible.

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