The competition watchdog will demand ESSO and BHP Billiton explain in more detail why gas supplies from its Bass Strait joint venture will decline sharply next year amid concerns the nation is "being held to ransom".
There are also calls for acting resources minister Barnaby Joyce to make public a study into offshore gas resources he has had for more than a month that could shed light on the venture's future.
The Turnbull government has so far blamed soaring gas prices on governments in Victoria and NSW for blocking or stalling on new gasfields, and in Queensland for allowing excessive LNG exports.
But by far the biggest contributor to the projected national shortfall of 55-108 petajoules of gas in 2018 will be the 86pj drop from the Esso-BHP's record output of 330pj this year, according to a recent Australian Competition and Consumer Commission report.
"You can't have this big a shift in the dominant supplier in the southern market without looking at it further, and we absolutely will," ACCC chairman Rod Sims told Fairfax Media.
While the ACCC attributed the looming drop in Bass Strait gas to a "natural decline in legacy fields and investment decisions", Mr Sims conceded the regulator can't easily tell whether Esso-BHP were deliberately withholding gas to force up prices.
"We've got a certain amount of information but nowhere near enough to answer the question," he said. "We'll find out what we need to find out by early in the new year."
"It's one thing to behave in a way that suits your commercial interests and may not be a breach of the act, but it may also be a fairly callous bit of behaviour that's not helping the market," Mr Sims said. "That's why we have to dig deeper to understand this."
'Held to ransom'
The Victorian government is understood to have been frustrated by its lack of information about offshore gas resources held by BHP and Esso Australia, part of US oil giant ExxonMobil.
"The country gets to be held to ransom," one official said, declining to be named.
The joint venture drilled its first discovery well in 1965. Since then, the 50-50 partnership has sunk in about $20 billion of investment and extracted 4 billion barrels of oil and 8 trillion cubic feet of gas.
Tim Forcey, a former BHP engineer who worked on the joint venture for a decade up to 2010, said information wasn't flowing to governments "who need to know it".
While ESSO-BHP could state why development of a particular field was deferred, the ACCC would need a bevy of reservoir or chemical engineers "to tell whether they're talking bullshit or not", said Mr Forcey, who earlier this year co-wrote a study for Melbourne University challenging the notion of a gas shortage.
He noted ExxonMobil had recently bought the Dory field in the Bass Strait - with about 2000pj of gas. "Governments should be asking what the plans are: 'did you buy it to make sure it never gets developed'?"
(See AEMO chart below showing the disclosed resources of different gas fields in Australia as of the end of 2015.)
An Esso Australia spokesman said the 2018-20 forecast was "in line with average production rates" in the 2011-15 period.
"The Gippsland Basin joint venture has made significant investments to enhance gas supply, including the more than $5.5 billion investment in the Kipper Tuna Turrum project, which will access 1.6 trillion cubic feet of gas and help offset declines in our mature fields," he said.
Neither the Victorian and NSW governments nor Mr Sims have seen the results of the Offshore South East Australia Future Gas Supply Study that Mr Joyce received at the end of August.
One objective was to understand what gas is available for the east coast market, which has seen prices more than double for some big users as Australian gas exports soar.
"Key findings will be released once the government has considered them," a spokesman for Mr Joyce said, adding that much of the data was confidential and would not be made public.
Jason Clare, federal Labor's acting energy spokesman, said Prime Minister Malcolm Turnbull would "back the gas companies over consumers every time".
"In the interests of transparency, Turnbull must release this report immediately," he said.
Adam Bandt, the Greens energy spokesman said: "The fact that Malcolm Turnbull hasn't forced the big corporations operating in Commonwealth waters to disclose how much gas they're sitting on shows his attack on the states is just a disingenuous distraction."
Meanwhile, the ACCC is working on a separate investigation looking at whether ESSO-BHP's single marketing desk should be broken up.
Mr Sims said the probe, which is examining whether the single desk substantially reduces competition, should be concluded soon.
"We're getting to the end of the investigation," Mr Sims said, adding the results should be known "well before the end of the year".
Both BHP and Esso said they were working cooperatively with the ACCC's joint marketing investigation.
The Victorian government official said transparency over resources was one thing but real competition was needed. Splitting up the marketing desk might also help the market understand the nature of the resources available in Bass Strait, the official said.
Mr Sims said the ACCC had recommended about a year and a half ago that companies be required to report resources on the same basis "so that everybody knows who's got what everywhere".
"So far that hasn't been picked up [by the federal government] but I'm sure it's being looked at," he said.
The story 'Held to ransom': ACCC to probe big Esso-BHP gas drop first appeared on The Sydney Morning Herald.