Australia to mandate gas reservation for domestic use

The Australian government is introducing legislation to mandate that large liquefied natural gas (LNG) exporters reserve up to 20 per cent of their annual export volumes for domestic use. Aimed at easing domestic energy prices and preventing supply shortages, the policy is intended to flood the local market with approximately 10 per cent more gas than required annually. The scheme is expected to take effect from January 2028.

Following industry lobbying, the Albanese government has modified the proposal. Changes include limiting ministerial discretion over reservation amounts and adjusting the requirement from a strict 20 per cent mandate to an obligation of “up to 20 per cent”. Existing long-term contracts with international buyers will remain exempt from the new rules.

The legislation has faced significant criticism from energy giants. Shell Australia described the intervention as a “sledgehammer to crack a nut,” arguing it is a heavy-handed approach to a functional market. Industry groups, including Australian Energy Producers, have warned that the policy could discourage investment and reduce competition. Conversely, critics from unions and conservationists suggest the revised bill may still contain loopholes that allow exporters to prioritize lucrative foreign markets over domestic needs.