The Australian government is nearing the finalization of its Domestic Gas Reservation Scheme, with a bill set to be introduced next week. This scheme will mandate that LNG exporters reserve up to 20% of their total production for the Australian domestic market, aiming to address anticipated supply shortages on the east coast by the end of the decade. The scheme is slated to take effect on July 1, 2027.
This policy has sparked concerns among major Australian gas producers and exporters, who fear it could jeopardize Australia's reputation as a dependable global LNG supplier. Australia currently ranks as the world's second-largest LNG exporter, surpassing Qatar earlier this year. While the gas reservation plan was conceived before the recent Middle East conflict, the federal government is moving forward with it to bolster domestic energy security.
Sources close to the bill's development informed Bloomberg that no LNG exporter will receive a complete exemption from the rules. Following significant industry lobbying, Australia has slightly softened the proposed gas supply requirements. The initial proposal mandated that producers reserve 20% of their output for the domestic market. The revised proposal suggests reserving up to 20% of output, with the exact volumes to be determined annually based on a rolling five-year demand forecast.
In a positive development for the immediate domestic market, the government announced that Australia is expected to have ample gas supply to meet demand during the January to March 2027 quarter, with forecasts indicating a healthy surplus across the east coast market.
