(Bloomberg) — A new report linking Australia’s liquefied natural gas export boom to surging local energy prices is fueling fresh pressure to curb shipments and shore up domestic supply.

Wholesale electricity prices on Australia’s main grid have jumped about 73% since liquefied natural gas exports began a decade ago, averaging A$107.67 ($70.24) per megawatt-hour, according to research released Tuesday by progressive think tank, The Australia Institute. It found that there is a risk of shortfall in the fourth quarter and throughout 2026 should Queensland producers export all their uncontracted gas.

Australia is one of the world’s biggest exporters of liquefied natural gas, shipping about a fifth of global supply, mainly to Asia. That’s helped drive up local energy costs, with wholesale gas prices tripling, according to the report.

The export boom has also added pressure to a looming supply crunch in the nation’s south-eastern states — home to about two-thirds of the population. That’s forcing policymakers to consider imports to bolster supplies. Another hurdle for the nation’s electricity grid is its reliance on aging coal-fired plants, which still generate around 65% of Australia’s power needs. 

The report comes as Abu Dhabi National Oil Co. pursues a $19 billion takeover of Santos Ltd., one of Australia’s top gas producers. If successful, the company known as Adnoc will be tasked with balancing lucrative LNG exports with local supply commitments like the Narrabri project — a development that could meet up to half of New South Wales’ gas demand.

Expanding supplies won’t resolve the shortfall unless more gas is reserved for local use, Mark Ogge, principal adviser at the institute, told reporters on Tuesday. Meanwhile, Geoff Crittenden, chief executive of industry group Weld Australia, warned that without urgent action on input costs — including energy — manufacturers will continue to move offshore.

“As Australia’s coal-fired power stations retire, the least cost replacement for that energy is renewable energy, firmed with storage, backed with gas, and connected with upgraded networks,” Australian Energy Market Operator chief executive, Daniel Westerman, said Tuesday at a conference in Sydney.

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