PERTH, May 20 (Reuters) - Australia's energy producers

endorsed a government strategy to boost natural gas development,

but warned the country still faces new gas supply shortfalls

this decade while markets remain volatile due to global

conflicts.

Meg O'Neill, chair of the Australian Energy Producers, said

the group welcomed the Future Gas Strategy released by the

government earlier this month, which highlighted that new gas

sources will be needed to meet both domestic and export demand

during the energy transition.

This comes amid volatility in the oil and gas market due to

the conflicts in Ukraine and the Middle East, she told an

Australian gas industry conference on Tuesday.

"This is a challenge Australia faces this decade. As the

Future Gas Strategy points out, without action, the east coast

of Australia faces projected shortfalls by 2028 and the west

coast by 2030," O'Neill, who is also the CEO of Woodside

Petroleum, said, adding that this could increase

volatility and drive up prices for households and businesses.

"The best solution to a shortage is always supply, supply,

supply... And we welcome acknowledgment in the Strategy that

we'll need the right regulatory settings to do so."

The Future Gas Strategy from Australia, last year's

second-largest exporter of liquefied natural gas (LNG), came

after the government faced criticism for its range of short-term

measures to boost domestic gas supply and lower soaring energy

prices, such as price caps and export limits from the country's

three east coast projects.

The measures prompted concern from the industry that they

would hurt long-term energy investments.

O'Neill also discussed changes the government made to the

country's the Petroleum Resource Rent Tax (PRRT).

The tax reforms helps the gas industry make future

investment decisions, but it does not address the ambiguity in

the consultation process for offshore approvals, O'Neill said.

"Leaving this issue unresolved makes the timely

development of new energy supply more difficult."

The government has extended a review on the

environmental management regime for offshore petroleum and

greenhouse gas storage activities which includes a focus on

clarifying consultation requirements for offshore activities.

"Legislation to complement outcomes of review did not

pass the senate last week, as we prioritized worker safety

provisions and ensuring certainty of petroleum resources and tax

reforms," Australia's Minister for Resources Madeleine King told

the conference.

The government is looking at ways to provide clarity and

certainty for all stakeholders, she said, adding that it wanted

to ensure genuine consultation is undertaken before any offshore

activity commences.

"I want the offshore regulatory regime to remain fit for

decarbonising the economy," King said.

Australia produces more gas than it needs to meet its

domestic demands, but most supply is contracted for export. The

country shipped out 80.9 million metric tons of LNG in 2023,

according to data and analytics group Kpler.

Its biggest customers are China, Japan and South Korea,

which are also the world's top three importers of the

super-chilled fuel.

Australia's energy market operator, however, said in March

that the country's southeast region faces the risk of gas

shortages during next year's winter months as demand may exceed

supply, and called for urgent new investment to prevent any

potential shortfall.