Federal gas reservation policy watered down after sector uproar, with volumes eased and start date pushed back
The Albanese Government has watered down a contentious domestic gas reservation policy after massive pushback from oil and gas giants, easing the volumes required and pushing back the start date.
The Albanese Government has watered down a contentious domestic gas reservation policy following uproar from local oil and gas giants.
The plan emerged in Labor’s Budget in May and would have forced exporters to set aside 20 per cent of LNG otherwise bound for overseas for the domestic market.
But a much-anticipated draft policy released on Thursday revealed they will now instead be required to quarantine “up to” one-fifth of gas production.
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By continuing you agree to our Terms and Privacy Policy.Energy Minister Chris Bowen, Resources Minister Madeleine King and Industry Minister Tim Ayres said in a joint statement the proposal would ensure the domestic market was “always modestly oversupplied” and gas was more affordable.
“Exporters could provide up to 200 additional petajoules of gas a year, ensuring more than enough secure gas along with domestic production to meet new manufacturing demands,” they said.
“This is more than enough to avoid AEMO (Australian Energy Market Operator) forecast possible shortfalls of up to 140 petajoules.
“This is a landmark Labor reform that will place significant downwards pressure on price paid by Australian gas consumers.
“The scheme ensures domestic customers can buy from a larger pool of gas, reducing the risk of tight market conditions driving price spikes, promoting long-term contracting and shielding them from global volatility.”
The reservation policy was set to kick in from July 1 next year but has been pushed back to January 1, 2028, with the ministers saying that would align with industry contracting cycles.
Santos boss Kevin Gallagher has been , initially saying it would “kill investment in new supply” then cause “mass panic” when supply dried up.
But in tempered remarks to the National Press Club on Wednesday, he called for the mandated domestic gas to be sold on term contracts or offered on domestic spot hubs, as opposed to a rigid “must sell” regime.
That “would let the market, rather than arbitrary forecasts, balance supply and demand”, he said.
More to come
