Australia to require LNG exporters to reserve 20% of gas for domestic market

Australia will require major gas exporters to reserve 20% of their export volumes for domestic use under a new gas reservation scheme, Energy Minister Chris Bowen said Thursday, as the country seeks to ease pressure from a prolonged energy crisis.

Bowen said the government finalized the model after months of consultations with the industry.

“That model will involve 20 percent of Australian gas exports being reserved for Australian use first,” Bowen told a press conference announcing the scheme.

“There’ll be a requirement on gas producers to sell that 20% to Australian users,” he added.

Bowen said the measure is intended to ensure “a modest oversupply” in the domestic gas market, putting downward pressure on prices while providing certainty for industry, households and gas-fired power plants supporting renewable energy.

The policy will apply to future contracts and the spot market, while existing contracts will remain unaffected, he said.

Resources Minister Madeleine King said the scheme would require liquefied natural gas (LNG) exporters to supply 20% of their total export production to the domestic market beginning July 1, 2027.

King said exporters seeking access to international spot markets would need to prove they had supplied the domestic market before receiving export approval.

“This is a structural shift which changes the bargaining balance and creates, really, a buyers’ market for domestic gas buyers,” she said.

Australia has faced recurring pressure over domestic gas supplies despite being one of the world’s largest LNG exporters, with households and manufacturers on the east coast exposed to high prices and tight supply linked to export demand and global energy market volatility.

The Australian Competition and Consumer Commission warned last month that the east coast gas market could face a supply gap ranging from a 12-petajoule shortfall to a 3-petajoule surplus in the third quarter of 2026, depending on how much uncontracted gas is exported by LNG producers.

The Australian Energy Market Operator has also repeatedly warned of longer-term supply risks in the east coast market, where declining production from aging fields and limited new supply have fueled concerns over future shortages.

The energy squeeze has intensified political pressure on Canberra to intervene more directly in the market after global gas prices surged in recent years, driving up costs for households and energy-intensive industries.