Australia has reached new gas supply deals for energy markets on its east coast.

This development is expected to provide some relief for concerns over long-term supply gaps as the country transitions away from coal-fired power stations, said Energy Minister Chris Bowen.

Over 260 petajoules (PJ) of gas will be supplied through 2033 through two new enforceable commitments with ExxonMobil’s Esso unit and Woodside.

These deals were made under the government’s gas code rules, which were put in place to ensure domestic supply commitments for the country’s east coast. Last year, Australia extended a price cap of A$12 ($8) per gigajoule on natural gas until at least mid-2025, but it relaxed the rule for big producers if they agreed on domestic supply commitments for the country’s east.

“Gas is critical to supporting a lower-cost, more renewable grid as aging coal exits and to supporting Australian manufacturing,” Bowen said in a statement.

He also noted that new supply deals will provide enough gas to power east coast gas-fired power stations for approximately two and a-half years. This will directly benefit stations that have been identified as being at risk of seasonal shortfalls, ensuring enough domestic supply to keep downward pressure on prices.

Australia’s energy market operator in March said the country faced risks of long-term supply gaps and must require additional commitments to expand its domestic gas supply.

Though Australia produces more gas than it needs to meet its domestic demands, most supply is contracted for exports.

The Labor government targets 82% of power to be supplied from renewable sources by 2030 and considers gas a critical element in the transition to cleaner energy.

The latest commitments follow deals reached in November 2023 with Australia Pacific LNG (APLNG) and Senex Energy, controlled by South Korea’s Posco International, to supply up to 300 PJ of gas by 2030. APLNG is a joint venture between ConocoPhillips, Origin Energy, and Sinopec.

In March, Australia’s energy market operator warned of long-term supply gaps and called for additional commitments to expand domestic gas supply. Though Australia produces more gas than it needs to meet its domestic demands, most supply is contracted for exports.

The Labor government has set a target of 82% of power to be supplied from renewable sources by 2030 and sees gas as a critical element in the transition to cleaner energy.

The latest commitments follow deals reached in November 2023 with Australia Pacific LNG (APLNG) and Senex Energy, which is controlled by South Korea’s Posco International. These deals will supply up to 300 PJ of gas by 2030. Notably, APLNG is a joint venture between ConocoPhillips, Origin Energy, and Sinopec.