The centre-left government of Prime Minister Anthony Albanese said it would work with exporters to design a system that allocates between 15% and 25% of gas for domestic use. — Reuters
SYDNEY: Australia will make exporters of liquefied natural gas (LNG) from the country’s east coast keep up to a quarter of their output for domestic use from 2027, under a scheme unveiled on Monday to curb price spikes and help fill a long-forecast supply gap.
The centre-left government of Prime Minister Anthony Albanese said it would work with exporters to design a system that allocates between 15% and 25% of gas for domestic use.
The announcement puts numbers on a policy that the government has flagged through this year amid persistent warnings about a shortage of gas supply on Australia’s east coast, where most of its 27 million people live.
“More affordable Australian gas for Australian users will support our economy and our transition, while remaining a reliable energy partner to our region,” said Climate Change and Energy Minister Chris Bowen. The proposal will only affect new contracts agreed by LNG exporters, not their existing contracts, Bowen said.
Australia, the world’s third-largest LNG exporter, ships out far more gas than it consumes.
The competition regulator warned on Monday that the expected local shortfall had widened, with output dropping from legacy fields off the south coast.
The scheme was recommended by a gas market review ordered by the government in the middle of this year, which was also published on Monday.
The review said a gas reservation scheme would put downward pressure on prices and urged the government to consider ending a A$12 or about US$7.94 per gigajoule price cap in place since 2022.
The scheme would impact three LNG export plants in Queensland, particularly Gladstone LNG (GLNG), industry watchers have said.
GLNG, operated by Santos and backed by Korea Gas Corp (Kogas), TotalEnergies and Malaysia’s Petroliam Nasional Bhd, has typically relied on third-party domestic gas to meet export commitments.
A GLNG representative was not immediately available for comment.
Rival export consortium Australia Pacific LNG, led by Origin Energy with ConocoPhillips and Sinopec, was also unavailable for comment.
Shell, which leads a third exporter Queensland Curtis LNG with CNOOC and MidOcean Energy, called the scheme “an important first step” and said it looked forward to working on the details.
Producers and energy users welcomed the certainty they said the scheme would bring, pending details still to come.
Industry body Australian Energy Producers, whose members include LNG exporters, called for more action to spur domestic production. — Reuters
