Australia Sets 20% East Coast Gas Export Reservation Starting 2027

The federal government has announced the design of an east coast gas reservation policy that will require producers to set aside the equivalent of 20% of export volumes for domestic customers. Under the policy, which takes effect on 1 July 2027, the three major Queensland-based gas exporters must preserve that volume for the east coast market.

Companies will need to demonstrate to the federal resources minister that they have met domestic supply obligations before receiving permits to sell gas on the overseas spot market. The 20% figure falls in the middle of the 15-25% range the government discussed with industry after it committed to a reservation scheme on 22 December.

The mandate will not apply to contracts signed before that December date. Officials stated the legislative requirement is expected to create a modest oversupply of gas on the east coast, which they said should help avert forecast shortages and exert downward pressure on prices.

Background to the Policy The start of liquefied natural gas exports from the east coast a decade ago linked the domestic market to international prices. That connection led to a tripling of prices and exposed Australian customers to global shocks, including those caused by Russia’s war in Ukraine.

Officials said the new arrangements mean the domestic gas market will no longer be directly tied to international price movements in the same way. As part of the changes, the government is also removing the existing “gas trigger” mechanism that could previously be used to require exporters to prioritise domestic supply.

The reservation policy was announced as the government continues to resist calls for a 25% tax on gas export revenue. The prime minister has ruled out introducing a new tax on existing contracts in next week’s federal budget. That decision was made partly to avoid a negative reaction from Asian trading partners that Australia relies on for fuel supplies amid the current global oil shock.

A parliamentary inquiry examining options for a new gas tax is scheduled to release its final report on Thursday.