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Australia to reserve 20pc of LNG projects' output

Australia to reserve 20pc of LNG projects' output

Sydney, 7 May (Argus) — Australia's federal government has fixed the amount of gas production that must be kept onshore for domestic users, with 20pc of LNG export volumes required to be supplied into local markets from 1 July 2027, with an exception for any existing contracts. The scheme will lower gas prices, the country's energy minister Chris Bowen said on 7 May, but Canberra declined to put a figure on the forecast price reduction for spot volumes. This will protect local industries reliant on gas and gas-fired power generation, the government said. The reservation will not apply to any export contracts signed before the December 2025 announcement of the reservation scheme . From commencement, projects wanting to export spot LNG will need to demonstrate supply into the domestic market before receiving a permit to ship supplies, creating a buyers' market for domestic gas, resources minister Madeleine King said. The exact volume of new gas entering the market from next year is uncertain. But LNG exports from east coast producers would average 1,253PJ, or about 22.6mn t/yr under long-term contracts and 85 PJ/yr or 1.5mn t/yr in expected LNG spot sales over 2026-35, according to Australia's annual Gas Statement of Opportunities (GSOO) report released in March. Gladstone harbour on Australia's east coast shipped 23.46mn t in 2025 and 24.04mn t in 2024. A total of 364 LNG cargoes were shipped from Gladstone's three projects in 2025. The projects are the 7.8mn t/yr Gladstone LNG (GLNG), the 9mn t/yr Australia-Pacific LNG (APLNG) and the 8.5mn t/yr Queensland Curtis LNG (QCLNG). Total output by LNG projects and domestic producers would fall by 12pc over 2026-30 , the 2026 GSOO said. The decline would largely be due to declining southern domestic field supply, which will fall from 318PJ in 2026 to 170PJ in 2030 as the Gippsland basin joint venture in Victoria state closes gas plants. Supply questions The 20pc reservation level would mean volumes equating to about 60pc of the east coast domestic gas market were pumped into the market, the upstream lobby Australian Energy Producers (AEP) said, arguing this would crowd out smaller domestic producers, reduce competition and impact future supply. Gas shortfalls would be better avoided by removing barriers to investment in new supply, AEP said. The plan could crash prices and deter investment by domestic-focused suppliers, Australian independent Beach Energy said. But Western Australia state's domestic reservation scheme for LNG exporters has not pushed out domestic suppliers, Bowen countered. But that state has shifted to allow some onshore LNG exports as an incentive for new projects to come on line , as it faces its own shortfall in supply into the 2030s . The scheme will permanently decouple pipeline gas from higher LNG prices, King said. But this is yet to occur despite a spike in international prices since the US-Iran war began. Argus ' Gladstone fob price, an LNG netback indicator calculated by subtracting freight and costs associated with production from the delivered price of LNG to Asia-Pacific, was A$21.23/GJ ($16.23/mn Btu) on 1 May, up from A$13.63/GJ on 27 February. The AVX, the Argus assessment for month-ahead spot gas deliveries to Victoria, stood at A$10.97/GJ on 30 April down from A$11.135/GJ on 27 February, largely due to mild weather conditions. By Tom Major Send comments and request more information at feedback@argusmedia.com Copyright © 2026. Argus Media group . All rights reserved.