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Gas companies will be forced to set aside local supply under major Labor shakeup
TL;DR
Gas companies must reserve 20% of their exports for domestic use starting July 1, 2027, to stabilize supply and reduce prices on the east coast. This new policy is part of a broader overhaul of gas sector regulations announced by the federal government.
Key points
- Gas companies must reserve 20% of exports for domestic use
- Policy starts on July 1, 2027
- Designed to stabilize supply and reduce prices
- Part of a broader overhaul of gas sector regulations
- Companies must prove domestic supply obligations are met
Mentioned in this story
Queensland-based gas exportersfederal government
Gas companies will be forced to set aside 20% of exports for domestic use under a reservation scheme designed to shore up supplies and bring down prices for households and businesses on the east coast.
The federal government announced the design of the reservation scheme on Thursday as part of a wider overhaul of the mechanisms regulating the gas sector.
Under the policy, which will start on 1 July 2027, the three big Queensland-based gas exporters would be forced to preserve an equivalent of 20% of export volumes for east coast market customers.
The companies would need to prove to the federal resources minister that their domestic supply obligations have been met to secure a permit to sell to the overseas spot market.
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The 20% mandate sits in the middle of the 15%-25% range that the government canvassed with industry after announcing its commitment to a gas reservation on 22 December.
It will not apply to contracts signed before that date.
The climate change and energy minister, Chris Bowen, said the legislative requirement would deliver a “modest oversupply” of gas into the east coast, helping to avert forecast shortages and put “downward pressure” on prices.
The start of LNG exports out of the east coast a decade ago linked the domestic market to the international market, leading to a tripling of prices and leaving Australian customers exposed to overseas shocks – such as Russia’s war in Ukraine.
“Our gas market will no longer be hostage to international markets,” said the resources minister, Madeleine King.
King announced wider changes to gas market rules, including removing the so-called “gas trigger” that can be used to force exporters to preserve supplies for domestic use.
The interventions come as the federal government resists mounting pressure to introduce a 25% tax on gas export revenue.
The prime minister, Anthony Albanese, has ruled out a new tax on existing contracts in next week’s federal budget, in part to avoid a backlash from Asian trading partners that Australia is relying on for fuel amid the global oil shock.
A parliamentary inquiry examining options for a new gas tax is due to table its final report on Thursday.
Q&A
What is the new gas reservation scheme announced by the federal government?
The new gas reservation scheme requires gas companies to set aside 20% of their export volumes for domestic use, effective July 1, 2027.
How will the gas reservation policy affect prices for households and businesses?
The policy aims to shore up local gas supplies, which is expected to help bring down prices for households and businesses on the east coast.
Which companies are impacted by the gas reservation scheme?
The scheme primarily affects the three major Queensland-based gas exporters who must comply with the domestic supply obligations.
