Australia has moved to establish its first national gas reservation scheme, with major exporters potentially required to direct up to 20% of production towards Australian households and industry.
The Federal Government has introduced legislation linking LNG export rights to a domestic supply obligation as it attempts to address concerns over future east coast gas shortages and elevated energy costs.
The government estimates exporters could provide up to 200 petajoules of additional gas annually under the scheme.
The new arrangements are expected to begin operating from 2028.
Gas prices in focus
Australia is one of the world’s largest LNG exporters, but manufacturers and energy users have repeatedly warned that domestic gas prices remain too high despite the country’s enormous reserves.
The government argues reserving additional supply will create a modest surplus in the domestic market, increasing competition between producers and putting downward pressure on prices.
Gas is also expected to remain important as coal-fired power stations close because it can provide electricity when renewable generation is unavailable.
Industry groups have warned the policy could have the opposite effect if it discourages investment in new gas projects.
They argue exporters need certainty around international sales to justify billions of dollars of development spending.
The debate is therefore likely to centre on whether Australia can simultaneously increase domestic supply while maintaining enough investment to develop new fields.
For manufacturers, households and electricity generators, however, the policy represents a major intervention in the Australian energy market, placing domestic supply ahead of unrestricted LNG exports for the first time nationally.
