The Australian government has announced a domestic gas reservation scheme that requires liquefied natural gas (LNG) exporters to allocate a portion of their production to the local market before approving exports.
The move aims to protect Australian businesses from global price volatility and maintain supply during the country’s energy transition.
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The scheme, announced following the release of the Gas Market Review, will mandate exporters to reserve between 15% and 25% of gas output for domestic use.
However, a final figure will be determined after consultations with industry, international partners, and communities, according to the statement.
The Gas Market Review suggested that a reservation scheme could put downward pressure on domestic gas prices.
Also, it recommended the removal of the A$12 ($7.94) per gigajoule price cap, which has been in place since 2022.
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By GlobalDataThe new policy would affect three LNG export facilities in Queensland, including Gladstone LNG (GLNG), reported Reuters.
Consultations on the detailed design of the scheme will begin in 2026, with implementation targeted for 2027.
Australia’s Minister for Climate Change and Energy Chris Bowen said: “More affordable Australian gas for Australian users will support our economy and our transition, while remaining a reliable energy partner to our region.
“Gas has an important role to play in our energy system as we transition towards 82 per cent renewables. Unlike coal, gas power generators can be turned on and off in a couple of minutes – providing the ultimate backstop in our energy grid.
“We acted in the midst of a global energy crisis to address gas shortfalls, ensuring supply and protecting consumers from the worst price spikes – now is the time to seize the opportunity and deliver lasting reform to our gas market.”
According to the statement, the scheme will operate alongside existing federal, state, and territory gas markets and aims to increase domestic supply.
All contracts signed before the announcement will be considered existing and will be honoured, and new contracts will be subject to the new requirements.
It requires the exporters to meet certain domestic supply obligations before receiving export approvals.
Also, it allows producers flexibility in meeting both domestic and export commitments through various commercial arrangements, provided supply obligations are satisfied.
Australian Energy Producers (AEP), an industry body representing the Australian oil and gas exploration and production sector, has expressed support for the scheme, but noted that the “design and implementation needed careful consideration”.
AEP CEO Samantha McCulloch said: “As we said from the outset of this review, a well-designed, prospective reservation policy can provide certainty for gas producers and users to invest with confidence.
“However, a reservation policy alone will not fix the East Coast gas market. Bringing new supply online sooner, including in the southern states that are facing shortfalls, is the only sustainable way to put downward pressure on prices and keep the market well supplied for the long term.”
In September this year, Australian government has granted Woodside Energy and its North West Shelf joint venture partners a final environmental approval for the North West Shelf Project Extension.
