Australia plans to extend domestic gas policy to 2030

Australia's recently elected Labor government plans to extend a policy that allows it to order the three LNG projects in eastern Australia to divert more gas to the domestic market to avoid shortfalls.

The policy, known as the Australian domestic gas security mechanism (ADGSM), was due to expire on 1 January 2023 and first introduced in 2017. The existing ADGSM is an important tool that the government could use to ensure ongoing security of Australia's domestic gas supplies, but has some clear shortcomings, Australian resources minister Madeleine King said on 5 July.

The Labor government has already started a review of the ADGSM to ensure the mechanism is fit for purpose. "The current ADGSM is a complex mechanism that would, if invoked, take a long time to produce results," King said.

Canberra will also renegotiate an interim agreement with east coast LNG producers to ensure they are prepared to participate in the ADGSM until the end of the decade and that security of supply is maintained to international customers of Australian LNG, the minister said.

"Australia remains a long-term and reliable supplier of resources and energy, and is a crucial supplier of LNG to our trading partners in north Asia," King said. "We remain committed to contributing to global energy security and working with international partners to address current global challenges."

The extension and review of the ADGSM come at a time when domestic gas prices in eastern Australia are at elevated levels. The AWX and AVX, the Argus assessments for month-ahead spot gas deliveries to Wallumbilla and Victoria respectively, were at A$34.83/GJ ($23.75/GJ) and A$35.50/GJ for August deliveries on 1 July, marginally down by A$0.625-0.67/GJ for month-ahead deliveries from the previous week.

The three LNG projects in eastern Australia are all located at the Queensland port of Gladstone and comprise of the Shell-operated 8.5mn t/yr Queensland Curtis LNG (QCLNG) venture; the 7.8mn t/yr Gladstone LNG (GLNG) venture operated by Australian independent Santos; and the 9mn t/yr Australia Pacific LNG (APLNG) venture operated by ConocoPhillips and Australian independent Origin Energy.

By Kevin Morrison