Recent pipeline investments committed to by APA: What does it mean?

APA’s investment in the ECGM

APA Group announced in February, a five-year East Coast Gas Grid (ECGG) Expansion Plan to deliver a targeted 24 per cent increase in north-to-south gas transport capacity and new southern market storage to help deliver gas to meet ECGM demand^[1]. The Plan by APA aims to build on the investments the pipeline company has made over the last four years in Stages 1 and 2 of the grid expansion (which have already added around 25 per cent of additional capacity to APAs grid).

This additional investment includes spending of around $75 million over the next two years which has been committed to, including $40 million to immediately deliver two enhancements to the grid that have reached Final Investment Decision (FID). A further $35 million will fund early works on Stages 3, 4, and 5 of the Plan, to support the development of new expansion and storage projects that will be developed over the medium-term.

Stage 3 will focus on developing the proposed Bulloo Interlink, a new 380km, 28-inch pipeline connecting the SWQP to the MSP, and two new compressors on the MSP. APA state that the project would progressively increase MSP capacity from 590 TJ/d to 700 TJ/d. SWQP capacity would also increase from 512 TJ/d to 605 TJ/d and capacity between Young and Melbourne would increase from 190 TJ/d to 229 TJ/d.

Stage 4 involves the delivery of the new Riverina Storage Pipeline in New South Wales, along with new compression and pipeline infrastructure. The pipeline has a proposed storage capacity of 200-500 TJ, and this is proposed to be used to supply gas to Uranquinty Power Station or meet nearby demand in New South Wales or Victoria.

The rationale for APAs investment

For a number of years now, the Australian Energy Market Operator (AEMO) has been warning of shortfalls in the ECGM. Supply has been forecast to be insufficient to meet physical demand, with the southern states facing the largest risk of not having enough gas to meet expected demand.

As a result of these warnings, investments in supply and supply capacity have been called upon. APAs pipeline network in the east coast is an integral part of the east coast supply chain, particularly in allowing gas in the northern states to travel south to southern states. In recent years the capacity of APAs network has been stretched in some cases, with investment required to ensure capacity of key pipelines are not limiting much needed gas to meet demand. APA has responded and investments have been made in increasing capacity. And this announcement summarises further investments by APA.

APA have stated that their plan is designed to ensure there is sufficient capacity for domestic gas to supply southern market demand, to avoid the market shortfalls otherwise forecast by AEMO and the ACCC. They mention that,

“More than 90% of the east coast’s identified gas reserves are located in the north of Australia, including over 31,000 petajoules in the Surat and Bowen basins. The Northern Territory Government estimates that there are over 200,000 petajoules of gas in place in the Beetaloo, which can be unlocked and moved south to meet projected demand.”

“These investments will help the Australian economy avoid the disastrous option of importing higher cost, higher emissions LNG, which will undermine domestic energy security and expose Australia’s energy market to global supply chains and prices.”

APA, therefore, are of the view that pipeline expansions will unlock more northern supply and prevent the need for other supply sources, particularly LNG imports.

What this might mean for the ECGM

The ECGM remains in a precarious position with the demand-supply balance still posing a challenge for industry to address. An important update from the Australian Energy Market Operator in their 2025 Gas Statement of Opportunities report has suggested the chances of a shortfall have weakened slightly from their view in 2024. Shortfalls are now not predicted to occur potentially until 2028, and not as early as 2026^[2]. Revisions on both the demand and supply sides of the market mean available supplies should be able to accommodate predicted demand until 2028.

APAs pipeline expansions have been highlighted in AEMOs report, along with other supply and infrastructure developments. The increased capacity of APAs grid is forecast to help the supply chain meet demand over the next few years. We expect that APAs further commitments to investing in the east coast grid are certainly much needed to help the ECGM in the coming years.

However, our projections for demand still suggest that even with APAs increased pipeline capacity, and other investments such as additional storage, the ECGM cannot expect to meet future demand without the need for LNG imports. The demand challenge is projected to significantly increase from the early 2030s and the position of key suppliers in the market (e.g. Longford) are projected to be supplying much lower volumes by then. The combination of the two poses a serious challenge for the ECGM. Our assessment suggests that LNG imports will increasingly be utilised from 2030 to meet demand, particularly seasonal and peak day demand. Irrespective of what APA commit to, LNG imports will be needed.

Therefore, the investments being made in upstream supply and infrastructure by the likes of APA and others, it still does not change the outlook in the long term regarding the need for LNG imports. These terminals still need to be developed if the outlook for the market, especially demand, trends the way we expect. There is a long way to go for this market to be in a position where available supplies can match long term demand expectations.