The Australian federal government has unveiled a new scheme that requires energy exporters to reserve 20 per cent their total production for the country’s east coast, a move designed to avert supply shortfalls and lower gas prices.
The domestic gas reservation scheme will commence on July 1, 2027 and will put strong downward pressure on local gas prices.
The new policy aims to decouple local gas prices from volatile international markets and prevent the supply shortfalls that have plagued the east coast for years.
Minister for Climate Change and Energy, Chris Bowen, described the move as a sensible, practical policy to ensure energy sovereignty.
“Australia has been the only gas exporting country in the world without some form of reservation,” Bowen said during a press conference announcing the scheme.
“This is a policy which will obviously not please everyone – often good policy doesn’t – but it’s good policy which puts Australia’s national best interest first.”
The reform specifically targets the spot market and future contracts, meaning existing export agreements entered into before December 22, 2025 will be fully respected.
The Minister for Resources, Madeleine King, emphasised that the scheme would shift market dynamics in favour of local buyers.
By requiring exporters to demonstrate actual supply to the domestic market before receiving export approvals, the government expects to create a buyer’s market.
“This is a historic structural shift,” King said.
“Our gas prices will no longer be hostage to international markets. It will ensure that we have stable and, really importantly, long-term policy settings that will drive a permanent wedge between international and domestic gas prices.”
To streamline the sector, the government will phase out the patchwork of existing ad hoc policies, including the Australian Domestic Gas Security Mechanism (ADGSM) and the current Gas Market Code, in favour of this permanent legislative framework.
Despite the domestic focus, the government reaffirmed its commitment to remaining a reliable energy partner in the region, noting that LNG exports remain vital to Australia’s international standing and economic health.
The government will now begin targeted consultations with industry stakeholders to finalise the design details before legislating the obligation.