Australia domestic gas reservation policy development

Australia is developing a gas reservation policy to bolster domestic supply and support the manufacturing sector. Initial proposals required eastern Australian liquefied natural gas exporters to divert 20 per cent of their export volumes to local homes and businesses starting in July 2027. Industry leaders suggested this could “create a renaissance in the manufacturing sector” by stabilizing costs.

The government has since revised the scheme, moving from a mandatory 20 per cent requirement to a model where suppliers must provide “up to” one fifth of production, contingent upon the domestic market being adequately supplied. Energy Minister Chris Bowen stated the policy focuses on ensuring competitive prices through supply management rather than fixed price targets. The implementation date has been pushed back to July 2028 to align with industry contracting cycles.

Under the proposed Domestic Gas Reservation Bill 2026, the Australian Energy Regulator (AER) will determine specific annual volumes for exporters. The revised framework includes ministerial discretion to reduce obligations if producers encounter infrastructure constraints or pre-existing contract limitations. This flexibility follows pressure from Asian trading partners, such as Japan, South Korea, and Malaysia, regarding the honoring of long-term export contracts. While industry groups like Australian Energy Producers welcomed the concessions, they warned that potential oversupply might discourage new development. Additionally, Western Australia has advocated to remain separate from the federal scheme, citing its own 15 per cent reservation model.