The Australian government will introduce next week a bill setting the final rules in the so-called Domestic Gas Reservation Scheme, which will require LNG exporters to keep up to 20% of their total production in Australia, whose east coast is expected to face supply issues at the end of the decade.
The scheme, which will come into force on July 1, 2027, has raised concerns among the biggest gas producers and exporters in Australia that argue the requirement could undermine Australia’s position as a reliable LNG supplier to the global markets.
Australia is currently the world’s second-largest LNG exporter behind the United States, having toppled Qatar earlier this year, when Qatari LNG supply remained stuck and stranded at the Strait of Hormuz.
Australia’s plans for the gas reservation scheme precede the Middle East conflict, but the federal government is proceeding with it, to protect domestic energy security and ensure supplies are enough for the east coast going forward.
The government will introduce legislation underpinning the scheme next week, unnamed sources directly involved in the bill told Bloomberg on Friday.
No LNG exporter will be given full exemption from the rules, they added.
Under intense lobbying from industry, Australia last month eased the gas supply rules. Originally, the rules stipulated that producers should reserve 20% of output for the Australian market. Now, the proposal is for up to 20% of output to be reserved for the domestic market, while the exact volumes would be set every year based on a rolling five-year demand forecast.
In a near-term relief for the domestic market, the government said today that Australia is expected to have plentiful gas supply to meet demand during the January to March 2027 quarter.
“Forecasts show a healthy surplus across the east coast market,” the Department of Industry, Science and Resources said.
By Tsvetana Paraskova for Oilprice.com
