New Australian policy aims to curb gas prices and prevent supply shortages.
SYDNEY – Australia will require liquefied natural gas (LNG) exporters to allocate 20% of new supply for domestic market needs, as part of efforts to curb prices and prevent gas shortages along the east coast.
Energy Minister Chris Bowen and Resources Minister Madeleine King said in Sydney on Thursday (6/5) that the new policy will apply to new contracts as well as the spot market starting from 1 July 2027.
According to Bloomberg data, Australia is currently the world’s second-largest LNG exporter, particularly after supply from Qatar declined following the Middle East conflict.
However, all 10 of its export terminals are located in the west and north of the country, while gas reserves on the east coast continue to decline and new project developments face strong opposition.
The new policy is expected to significantly affect three major projects in Queensland — Australia Pacific LNG, Gladstone LNG, and QCLNG — along with shareholders such as ConocoPhillips, Shell, Origin Energy, and Santos.
The policy comes after the government decided to scrap plans to impose a new tax on gas exports in next week’s budget, despite pressure from voters and activists.
Several domestic institutes have questioned the effectiveness of the policy in generating additional state revenue.
In addition, although the measure is intended to safeguard domestic supply, BloombergNEF analyst Sahaj Sood also doubted whether supply from operational hubs could quickly reach southern Australia during periods of high demand, due to limited pipeline capacity. (DK/ZH)
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