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Draft Framework Requires Gas Exporters to Supply 20 Percent to Domestic Market
A federal government draft framework released on Monday sets a 20 percent domestic supply obligation for LNG exporters. The plan applies to new export approvals and includes penalties for non-compliance. Existing contracts signed on or before 22 December 2025 would remain exempt.
May 25, 7:09 PM·1m read1 source
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A draft framework released on Monday outlines a requirement for liquefied natural gas exporters to supply 20 percent of their exports to the domestic market each year. Producers seeking to maintain export approvals must meet the obligation through measures such as reducing exports, importing LNG, swapping gas, or paying other suppliers.
The framework states that companies failing to comply could face penalties of up to $100 million or three times the value of any benefit obtained. Export approvals could also be restricted. A minimum liquidity requirement is included to maintain modest oversupply and place downward pressure on prices.
The scheme would apply nationally but would recognize existing state-level arrangements such as Western Australia's reservation policy. Contracts entered on or before 22 December 2025 would be respected. The government said producers unable to meet obligations immediately would be expected to make up shortfalls in future years.
The group also stated the plan would send a negative signal to trade partners including Japan, South Korea, and Malaysia. An oil and gas industry analyst noted that the Gladstone LNG project operated by Santos has zero net domestic supply and would face high hurdles to receive a lower obligation.
The analyst added that rival producers could offer to supply gas on its behalf, limiting arguments that all supply is needed for overseas contracts.
