Australia Eases East Coast Gas Reservation Rules, Cap Adjusted to 20% of Production

en.Wedoany.com Reported - On September 10, the Australian government adjusted its proposed East Coast gas domestic reservation mechanism, changing the previous plan that required LNG exporters to reserve a fixed 20% of natural gas to a mechanism that reserves up to 20% of production for supply to the domestic market. Australian Energy Minister Chris Bowen stated that the new plan is expected to add up to 200 petajoules of natural gas supply to the domestic market annually.

The Australian Energy Market Operator had previously estimated a potential supply shortfall of up to approximately 140 petajoules in the East Coast gas market. Under the latest design, the cap of 200 petajoules of additional domestic supply exceeds this projected shortfall. The specific reservation ratio will no longer be uniformly fixed at 20%, but will be determined within a framework of up to 20%.

The Australian government initially proposed a reservation ratio range of 15%–25% in December 2025, and further proposed a fixed 20% plan in May 2026. The previously announced design required LNG exporters to supply the domestic market annually with an amount of natural gas equivalent to 20% of their export volume, and explicitly stated that export contracts already signed before December 22, 2025 would continue to be honored. This adjustment changes the fixed ratio to a cap mechanism.

The new mechanism mainly affects three major LNG export projects on Australia's East Coast: Australia Pacific LNG, in which Origin Energy participates in operations; Queensland Curtis LNG, operated by Shell; and Gladstone LNG, operated by Santos. All of the above projects are located in Gladstone, Queensland, and obtain or produce natural gas through the Eastern Gas Market for liquefaction and export.

The Australian government's previously announced gas market reform plan also includes integrating the existing Australian Domestic Gas Security Mechanism, gas market rules, and supply arrangements signed with East Coast LNG exporters. The new domestic gas reservation system will establish a long-term regulatory framework through legislation, and exporters' domestic supply obligations will be incorporated into a new unified mechanism.

Approximately three-quarters of Australia's national natural gas production is used for export, but large natural gas resources are mainly concentrated in the northwest, while population and industrial gas demand on the East Coast are concentrated. Western Australia has already implemented an independent gas reservation policy, requiring relevant offshore export projects to supply 15% of natural gas to the local market.