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Australia Proposes Domestic Gas Supply Set-Aside Rule for Exporters

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The Australian government will submit to parliament a proposal obliging gas producers to provide up to 20% of their output to the domestic market, thereby lowering prices and tackling undersupply, the government said in a statement on Wednesday.

The policy aims to ensure that the domestic market "is always modestly over-supplied", it said, announcing it would take effect from Jan. 1, 2028, if passed by parliament.

"For too long Australia has been in the perverse situation where despite being one of the world's largest gas producers we had shortages and prices shocks at home," said Minister for Climate Change and Energy Chris Bowen.

"We're fixing that - with a system that secures the gas we need and pushes prices down for households and businesses. Gas will be a crucial energy source as we transition to renewables, and cheaper gas can only help people and businesses to make the switch."

The measure could translate into the provision of up to 200 more petajoules of gas a year, ensuring that new manufacturing-related demand is met and to avoid predictions of potential gas supply shortfalls of up to 140 petajoules.

Reuters reported that the measure is a revision of a prior proposal to set a firm 20% domestic set-aside rule for gas producers in Australia and replace it with a mechanism that would enable the energy regulator to determine the portion.

"The scheme ensures domestic customers can buy from a larger pool of gas, reducing the risk of tight market conditions driving price spikes, promoting long-term contracting and shielding them from global volatility," the statement said.

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