Australia to Release Final Plan to Keep More LNG at Home

According to a report from Rigzone, the Australian government is expected to present legislation next week for a new Domestic Gas Reservation Scheme. The policy aims to address projected energy deficits on the nation's east coast by requiring liquefied natural gas producers to set aside as much as one-fifth of their total production for domestic consumers. This final plan follows a period of intense industry lobbying after the initial draft was released in May.

The regulation will primarily impact major Queensland-based projects, including Australia Pacific LNG, Gladstone LNG, and QCLNG. These developments involve major stakeholders such as Shell, ConocoPhillips, and Santos. While projects in Western Australia already manage a state-level reservation requirement, this new federal mandate is anticipated to put significant pressure on the Gladstone project, which has previously faced challenges in meeting its existing export obligations.

The proposed mandate has drawn criticism from energy producers who argue the move could discourage future infrastructure investment and harm Australia's standing as a dependable global supplier. Though exact quotas will be determined annually based on five-year demand outlooks, no single exporter is expected to be granted a full exemption. The new licensing process is scheduled to commence at the start of 2027, with the supply requirements taking effect in 2028.

Market analysts suggest the policy may support higher global LNG prices as Australia is currently the second-largest exporter in the world. Most of the country's gas exports are currently destined for China, South Korea, and Japan. Beyond market pricing, there are concerns that the supply restrictions could negatively impact national revenue, as LNG remains one of the country's most significant export commodities alongside iron ore and coal.