In a move that suggests the Australian government has finally noticed that gas companies have been treating the domestic market like an afterthought, gas exporters will now be required to set aside 20% of their exports for local use. The reservation scheme, announced Thursday as part of a broader overhaul of gas sector regulations, aims to shore up supplies and bring down prices for households and businesses on the east coast.
Starting July 1, 2027, the three big Queensland-based gas exporters will need to preserve an equivalent of 20% of export volumes for east coast customers. To secure a permit to sell to the overseas spot market, they must prove to the federal resources minister that they've met their domestic supply obligations. The 20% mandate sits comfortably in the middle of the 15%-25% range the government had been floating since announcing its commitment to a gas reservation on December 22. Contracts signed before that date are exempt, because nothing says 'fairness' like grandfather clauses.
Climate change and energy minister Chris Bowen said the legislative requirement will deliver a 'modest oversupply' of gas into the east coast, helping to avert forecast shortages and put 'downward pressure' on prices. This comes a decade after LNG exports out of the east coast linked the domestic market to the international market, tripling prices and leaving Australian customers exposed to overseas shocks like Russia's war in Ukraine. Resources minister Madeleine King declared, 'Our gas market will no longer be hostage to international markets,' while also announcing removal of the so-called 'gas trigger' that could force exporters to preserve supplies for domestic use - because nothing says 'freeing hostages' like removing a safety net.
The interventions come as the federal government resists mounting pressure to introduce a 25% tax on gas export revenue. Prime Minister Anthony Albanese has ruled out a new tax on existing contracts in next week's federal budget, partly to avoid a backlash from Asian trading partners Australia relies 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, which should make for some interesting reading.