Australia's proposed domestic gas reservation scheme is facing renewed industry opposition, with producers warning that forcing additional gas into the domestic market could discourage investment and ultimately reduce future supply.
The Federal Government is progressing legislation designed to require LNG exporters to make part of their exportable gas available to Australian customers.
The policy is intended to increase domestic supply and put downward pressure on gas prices for households and manufacturers.
However, industry participants appearing before parliamentary scrutiny have argued that mandatory oversupply could displace existing domestic producers and reduce their incentive to invest in new wells.
Supply security debate intensifies
Beach Energy chief executive Brett Woods told a parliamentary hearing that the scheme risked undermining investment by producers already supplying the domestic market.
Beach argued that an oversupply requirement could reduce sales available to domestic producers that do not export east coast gas, weakening cash flow available for exploration and development.
The government maintains that a reservation framework is necessary to protect Australian consumers from future shortages despite the country's status as a major LNG exporter.
The proposed framework could reserve up to 20% of exportable gas, with the precise requirement to be calibrated according to expected domestic demand and supply.
The reservation system is expected to commence in 2027, with supply obligations scheduled to begin from January 2028.
The debate now centres on whether mandated supply can lower prices without reducing the investment needed to develop new gas resources.
