Queensland LNG exporters face new domestic supply rules

The three LNG projects in eastern Australia's Queensland state will be required to offer any uncontracted gas to domestic users on market terms before it is exported, as part of a new agreement with the government.

The deal between Canberra and the operators of the 9mn t/yr Australia Pacific LNG (APLNG), 8.5mn t/yr Queensland Curtis LNG (QCLNG) and 7.8mn t/yr Gladstone LNG (GLNG) projects will help secure competitively priced gas supply for the east coast market until 2023 at least, Australian resources minister Keith Pitt said.

"The strengthened heads of agreement commits LNG exporters to offer uncontracted gas to the domestic market first on competitive market terms before it is exported," Australian prime minister Scott Morrison said.

The deal will complement the Australian Domestic Gas Supply Mechanism (ADGSM), which references the Australian Competition and Consumer Commission (ACCC) LNG netback price series, Pitt said. It is separate to a possible domestic gas reservation plan for eastern Australia. A decision on the gas reservation policy, which is designed to ensure that sufficient supplies are available to the region, is expected before 30 June.

"Both the Australian Energy Market Operator (Aemo) and ACCC have found the east coast of Australia has a low, but increasing, risk of facing a gas shortfall," Pitt said.

The three LNG projects in Gladstone exported a record 22.37mn t of LNG in 2020, up from 22.12mn t in 2019 but below their combined nameplate capacity of 25.3mn t/yr. The three ventures are also the largest gas producers in eastern Australia.

By Kevin Morrison