Australian natural gas exporters will need to reserve up to 20% of their supply for local buyers from 2028 – under mandatory export licenses – to support lower gas prices.
“For too long Australia has been in the perverse situation where, despite being one of the world’s largest gas producers, we [have] had shortages and [price] shocks at home,” Energy Minister Chris Bowen said on 10 September.
“Australian households and businesses, quite rightly, expect to have access to affordable Australian gas,” Bowen added.
The Government will negotiate specific reserve requirements with exporters based on domestic demand for their gas, the Department of Industry, Science, and Resources (DISR) said in an explainer on 10 September. Australia’s gas reservation scheme will take effect on 1 January 2028, the agency added.
The Government previously proposed a blanket 20% reserve requirement for exporters. Its blanket reservation scheme would have placed strong downward pressure on domestic gas prices and shielded Australians from global price volatility, multiple Ministers said on 7 May.
Energy Producers Australia (AEP) – an industry group representing bp, Chevron, ExxonMobil, and Santos – has welcomed the Government’s reserve requirement change, but remains opposed to its reservation scheme. “[DISR’s proposed reservation] will destroy investment signals and crowd out smaller, domestic-focused producers,” AEP Chief Executive Samantha McCulloch said.
“A domestic reservation policy that results in less competition and less investment is not in the national interest. Ultimately, it will mean higher prices and greater risk of future shortfalls,” McCulloch added.
The Australian Industry Group (AIG) – the country’s largest employer association – supports a gas reservation scheme, but has not formed a view of the Government’s proposal.
“Australia needs a gas reservation that is strong and fair, and we will work through new draft laws to ensure that happens,” AIG Chief Executive Innes Willox said. “The right result would see all in-market exporters contribute as much as possible towards meeting demand within the 20% reservation cap,” Wilcox added.
By Avinash Govind