Industry body Australian Energy Producers has urged the federal government to overhaul its proposed domestic gas reservation scheme, warning that key elements of the draft legislation risk dampening future investment, suppressing competition, and undermining long-term energy security.
In a submission responding to the exposure draft legislation, the organisation reaffirmed its support for a well-designed, prospective reservation scheme linked directly to new gas supply.
However, it cautioned that without structural revisions, the framework risks distorting the national energy market.
Australian Energy Producers CEO Samantha McCulloch acknowledged that while the government had introduced important refinements, fundamental policy flaws remained unaddressed.
“The government has made some important improvements to the proposed reservation scheme, but critical flaws must be addressed for the reservation scheme to work,” McCulloch said.
“As currently proposed, the scheme risks crowding out domestic-focused producers, reducing competition and diversity of supply, and discouraging investment in future gas supply.”
McCulloch warned against short-term market interventions, stressing that artificially oversupplying the market might offer temporary price relief, but would ultimately trigger severe price pressures and supply risks as future project investments dry up.
Australian Energy Producers outlined key priorities for reforming the draft framework, including replacing forced sale requirements with genuine offer obligations, establishing clear production baselines, and calibrating supply obligations to match actual demand.
The body also called for the protection of Western Australia’s existing state reservation model, a narrower scope for ministerial discretion, recognition of physical infrastructure constraints, and the establishment of a risk-based compliance regime.
The group emphasised that a balanced reservation framework must encourage new supply rather than force unneeded volume into a stable market. Maintaining investor confidence remains vital to ensuring Australian households and businesses retain access to reliable and affordable energy over the long term.
“The final framework must ensure Australian customers have access to the gas they need while supporting the long-term investment required to ensure Australian households and business continue to have access to reliable and affordable gas,” McCulloch said.
