Australia will require natural gas exporters to reserve as much as a quarter of new production for domestic use, in a bid to tackle high prices and a forecast shortfall on its more populated east coast.
The policy is set to take effect in 2027, and will only apply to supply contracts signed from Monday and not existing agreements, Energy Minister Chris Bowen said in Canberra. The final percentage to be reserved will be between 15 percent and 25 percent, although that will be finalized after a consultation next year, he said.
Australia is the world’s third-largest LNG shipper, but its 10 export terminals are all located in western or northern areas. Gas fields on the east coast are rapidly depleting, while plans to develop new projects have run into intense opposition.
“More affordable Australian gas for Australian users will support our economy and our transition, while remaining a reliable energy partner to our region,” Bowen said.
The policy will mainly affect Queensland’s three major liquefied natural gas export projects – Australia Pacific LNG, Gladstone LNG and QCLNG – and shareholders including Conocophillips, Shell Plc, Origin Energy Ltd. and Santos Ltd. They weren’t immediately available for comment.
Demand for the fossil fuel on the east coast is expected to exceed supply from 2028, according to the Australian Energy Market Operator. Western Australia, which has some of the biggest LNG plants but no pipeline links to the rest of the country, already requires producers to reserve as much as 15 percent of output for local use.
Other options have also been considered to solve Australia’s east coast gas crunch, including installing expensive gas import terminals in Victoria or reversing pipelines that historically flowed north. The state recently released its first petroleum exploration tenders in seven years.
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