Australia Implements Gas Reservation Policy to Lower East Coast Energy Prices
Australia has introduced a new gas reservation policy requiring three major east coast LNG exporters to reserve between 15 and 25 percent of their gas production—equivalent to 200-350 petajoules annually—for domestic use. This policy, announced by Energy Minister Chris Bowen, aims to prioritize domestic gas supply and reduce energy costs for Australian consumers.
The gas export permit scheme will officially take effect from 2027, but the reservation requirement must be incorporated into all new gas contracts from now onward. Details of the policy are to be finalized in the coming months through consultations with industry participants and other stakeholders.
This initiative intends to create an oversupply of Australian gas for domestic needs, which is expected to lower energy prices on the east coast. The Australian Energy Regulator has cautioned that New South Wales and Victoria could face gas shortages by the winter of 2028, driven by diverted gas supplies to offshore markets and concerns from heavy industry.
Victorian households have experienced nearly doubled gas costs over the past decade, coinciding with increased LNG exports. Analysts have noted that targeting LNG exporters for gas reservation is a direct approach to reducing prices, with the potential for cheaper gas to also lower electricity prices and impact new multi-year industrial contracts.
