The Albanese government has revised its national gas reservation system, now asking LNG producers to set aside “up to 20%” of their exports for the domestic market, a departure from the previously proposed fixed 20%. Federal Resources Minister Madeleine King indicated that Western Australia might be exempt if its existing scheme is deemed satisfactory. The initial plan aimed to permanently resolve domestic supply issues by mandating a full 20% reservation.
However, the latest draft legislation, released on Thursday, suggests that exporters will not necessarily need to reserve the full 20% if the domestic market is adequately supplied. The government has also postponed the scheme's start date by an additional six months, pushing the supply obligations for gas exporters to January 1, 2028, to align with industry contracting cycles. This change has drawn criticism from some analysts, who view it as a significant backdown.
Energy Minister Chris Bowen stated that the adjusted policy aims to prevent shortfalls and ensure a stable domestic supply, allowing exporters to offer up to 200 additional petajoules of gas annually, comfortably exceeding the projected deficit of up to 140 petajoules. The revised plan, which will affect major LNG exporters like Origin Energy, Shell, and Santos, offers a flexible reservation range of 15% to 25%, aiming to make gas more affordable and maintain a modest domestic surplus.
Industry figures, including the CEO of Santos Ltd., have previously called for regulations that encourage investment in new assets to avert domestic shortfalls and ensure global market supply. While Australia is a major LNG exporter with significant reserves in the northwest, the greatest demand is in the southeast, making such regulatory measures crucial.
