Gas companies will be forced to set aside local supply under major Labor shakeup | Australian politics
Gas companies will have to reserve 20% of exports for domestic use under a reservation scheme designed to shore up supply and lower prices for east coast households and businesses.
The federal government announced the design of the reservation plan on Thursday as part of a broader overhaul of the mechanisms that regulate the gas sector.
Under the policy, which starts on July 1, 2027, three major Queensland-based gas exporters will have to maintain the equivalent of 20% of their export volumes for east coast market customers.
Companies will need to prove to the federal resources minister that their domestic supply obligations have been met to receive permission to sell into the overseas spot market.
The 20 percent mandate is in the middle of the 15-25 percent range the government discussed with industry after announcing its gas reserve commitment on December 22.
It will not be valid for contracts signed before this date.
Climate change and energy minister Chris Bowen said the legal requirement would provide a “modest supply” of gas to the east coast, help avoid predicted shortages and put “downward pressure” on prices.
The introduction of LNG exports from the east coast a decade ago linked the domestic market to the international market, causing prices to triple and exposing Australian customers to overseas shocks such as Russia’s war in Ukraine.
“Our gas market will no longer be hostage to international markets,” said resources minister Madeleine King.
King announced wider changes to gas market rules, including the removal of the so-called “gas trigger”, which could be used to force exporters to preserve supply for domestic use.
The interventions come as the federal government resists growing pressure to impose a 25% tax on gas export revenues.
Prime Minister Anthony Albanese has ruled out introducing a new tax on existing contracts in the federal budget next week in a bid to avoid a backlash from Asian trading partners Australia relies on for fuel amid a global oil shock.
The final report of a parliamentary inquiry examining options for a new gas tax will be presented on Thursday.
