The Australian government has launched a comprehensive review of Australia’s gas market regulations, with a sharp focus on the east coast gas market, as it seeks to secure long-term domestic gas supply and maintain Australia’s reputation as a reliable energy exporter.
Announced on June 30, the review comes amid warnings from the Australian Competition and Consumer Commission (ACCC) of a deteriorating short-term supply outlook and projected structural shortfalls from 2028 unless new gas supply is brought online.
The review will examine the effectiveness and coherence of existing regulatory instruments, including the Australian Domestic Gas Security Mechanism (ADGSM), the Gas Market Code, and the Heads of Agreement with major east coast gas exporters.
The government aims to consolidate and streamline these frameworks to create a stable regulatory environment that supports domestic energy security and affordability, while also encouraging sustainable investment and putting downward pressure on prices.
Minister for Climate Change and Energy Chris Bowen emphasised the critical balancing act facing policymakers, stating: “It’s critical that we use this review to get the settings right in our gas market, ensuring we are securing affordable Australian gas for Australian use, while remaining a reliable energy exporter and delivering lasting energy security in our region.”
The review aligns with the government’s Future Gas Strategy, released earlier in 2024, which positions gas as a vital complement to renewables, batteries, and pumped hydro in Australia’s evolving energy mix.
The ACCC’s latest gas inquiry report, released the same day as the review announcement, underscores the urgency of the task.
While short-term supply is currently sufficient, the outlook for 2025 and 2026 has worsened, with the risk of shortfalls if Queensland LNG producers export all uncontracted gas.
Southern states are expected to become increasingly reliant on Queensland as local reserves deplete, and the ACCC warns that “long-standing impediments to the development of east coast gas reserves by a diversity of suppliers need to be addressed”.
“Gas prices eased over the past six months, reflecting movements in international prices and an increase in market activity following implementation of the Gas Code,” ACCC Commissioner Anna Brakey said.
“However, prices continue to be higher than pre-2022 levels.
“Concerningly, supply into the domestic market has fallen since that time and gas is increasingly being sold on a short-term basis, posing challenges for gas users who need longer-term certainty for their businesses.”
A prospective gas reservation policy for the east coast is under consideration, modelled in part on Western Australia’s longstanding requirement that LNG exporters reserve a portion of production for domestic use.
Minister Bowen clarified that any new reservation rules would apply only to future projects, not existing contracts, to provide certainty for current producers while setting clear guidelines for new developments.
Industry has broadly welcomed the review.
Australian Energy Producers Chief Executive Samantha McCulloch said: “The review is an opportunity to future-proof the east coast gas market and ensure reliable and affordable gas supply for Australian households and manufacturers.”
She added that the review should focus on delivering new gas supply by streamlining regulation and restoring market signals.
Consultation will be central to the review process, with the government seeking input from industry, stakeholders, and the public over the coming months.
The review’s terms of reference and consultation paper are available on the Department of Climate Change, Energy, Environment and Water website.
With the east coast gas market facing mounting supply pressures and policy uncertainty, the outcome of this review will be pivotal in shaping Australia’s energy security and affordability for years to come.
