Originally published by Rosie Lewis and Colin Packham of The Australian.
14.10.2026
Labor has failed to win over the Coalition and energy producers after unveiling legislation for its controversial gas reservation scheme, leaving the program’s future in doubt as the government pledges to deliver a “sufficient volume” of gas into the east coast market while putting downward pressure on prices.
The Coalition is promising to work productively with the government in the national interest, and demanding Labor work with it rather than the “anti-gas” Greens, but major sticking points remain.
Labor will push ahead with its commitment to oversupply the domestic market by requiring exporters to offer gas equivalent to as much as 110 per cent of forecast domestic demand.
It also remains committed to “must-sell” provisions, which force exporters to sell up to 20 per cent of LNG export volumes to the domestic market even if buyers are reluctant to contract at the prices on offer.
Energy producers were quick to slam the government for pursuing an artificial oversupply of gas, warning it would weaken investment signals and crowd out smaller, domestic-focused producers.
“The proposed ‘must sell’ requirement compounds these risks by potentially forcing producers to sell gas below cost or on non-commercial terms,” Australian Energy Producers chief executive Samantha McCulloch said.
“This is another short-term price intervention rather than a sustainable policy to encourage investment in new gas supply and deliver long-term certainty for gas producers and users. Artificially oversupplying the market might deliver a short-term sugar hit, but it risks driving domestic-focused producers out of the market, reducing competition and ultimately putting upward pressure on prices and increasing the risk of future shortfalls.”
Opposition resources spokeswoman Susan McDonald said the Coalition wanted to see more gas for Australians but also more investment in gas, and feared the reservation scheme would not increase investment in gas exploration and development.
“Today, as Labor introduces its gas reservation legislation, numerous questions remain about the viability and design of the scheme. The number one focus needs to be more Australian gas, for Australians, and for our export partners,” she said.
“Reserving gas on paper is one thing. Ensuring we have the supply, investment and infrastructure to deliver affordable, reliable energy to Australians when and where they need it is another.”
The Australian understands the Coalition shares industry concerns about the must-sell requirement and artificial oversupply, but also wants to ensure manufacturers have the gas they need.
Energy producers urged the government to work with the Coalition to “address these critical flaws” and deliver a “sustainable” framework ensuring households and businesses have access to reliable and affordable gas over the long term.
“The government cannot expect industry to invest billions of dollars in new gas supply while introducing policies that fundamentally undermine the commercial viability of those investments,” Ms McCulloch said.
Addressing the National Press Club in Canberra on Wednesday after introducing legislation in the House of Representatives, Resources Minister Madeleine King said a “modest” oversupply would push down gas prices, which was a “very important” aspect of the scheme.
She argued it would be flexible and take account of exporters’ access to and volumes of gas.
“The whole reservation scheme does have an element of flexibility in it and that’s important because different exporters, whether they are exporting offshore from places around the country or onshore out of Queensland, simply have different access to different amounts and volumes of gas,” she said.
“So we do have to be flexible and make sure that the scheme does reflect reality.
“We all know having too little gas to firm renewables or provide for the manufacturing industry is as dangerous as having a massive oversupply which crashes the market, but also it can undermine investment in renewables so it’s a really fine balance that we have to achieve here. We are about getting the sufficient volume into the system to put that downward pressure on prices.”
Greens senator Steph Hodgins-May. Picture: Chris Pavlich Greens senator Steph Hodgins-May. Picture: Chris Pavlich Greens deputy leader Steph Hodgins-May said there was nothing in the bill that stopped it from being a “favour factory” between Ms King and “Labor’s favourite gas donors”, as she renewed calls for a 25 per cent gas export tax raising $17bn annually.
“They also have a choice to make Australians’ lives worse by going and doing a deal with the gas-guzzling Liberal Party and basically wedding us to a future of coal and gas and fossil fuel dependence as we stare down the barrel of an almighty El Nino … (or) do a deal for everyday Australians, work with the Greens,” she said.
Domestic gas producer Senex Energy, jointly owned by Gina Rinehart and Korean giant POSCO, accused the government of picking winners and losers with its gas reservation scheme.
Senex chief executive Darren Stevenson said the government had ignored warnings that deliberately oversupplying the domestic market would put downward pressure on prices at the expense of producers and the investment needed to develop new gas resources.
“The government has decided who will be the winners and the losers with this policy,” Mr Stevenson said.
“I encourage them to go to regional Queensland to apologise to those communities, small businesses and workers who will be demonstrably worse off under this policy.”
The Coalition is promising to work productively with the government in the national interest, and demanding Labor work with it rather than the “anti-gas” Greens, but major sticking points remain.
Labor will push ahead with its commitment to oversupply the domestic market by requiring exporters to offer gas equivalent to as much as 110 per cent of forecast domestic demand.
It also remains committed to “must-sell” provisions, which force exporters to sell up to 20 per cent of LNG export volumes to the domestic market even if buyers are reluctant to contract at the prices on offer.
Energy producers were quick to slam the government for pursuing an artificial oversupply of gas, warning it would weaken investment signals and crowd out smaller, domestic-focused producers.
“The proposed ‘must sell’ requirement compounds these risks by potentially forcing producers to sell gas below cost or on non-commercial terms,” Australian Energy Producers chief executive Samantha McCulloch said.
“This is another short-term price intervention rather than a sustainable policy to encourage investment in new gas supply and deliver long-term certainty for gas producers and users. Artificially oversupplying the market might deliver a short-term sugar hit, but it risks driving domestic-focused producers out of the market, reducing competition and ultimately putting upward pressure on prices and increasing the risk of future shortfalls.”
Opposition resources spokeswoman Susan McDonald said the Coalition wanted to see more gas for Australians but also more investment in gas, and feared the reservation scheme would not increase investment in gas exploration and development.
“Today, as Labor introduces its gas reservation legislation, numerous questions remain about the viability and design of the scheme. The number one focus needs to be more Australian gas, for Australians, and for our export partners,” she said.
“Reserving gas on paper is one thing. Ensuring we have the supply, investment and infrastructure to deliver affordable, reliable energy to Australians when and where they need it is another.”
The Australian understands the Coalition shares industry concerns about the must-sell requirement and artificial oversupply, but also wants to ensure manufacturers have the gas they need.
Energy producers urged the government to work with the Coalition to “address these critical flaws” and deliver a “sustainable” framework ensuring households and businesses have access to reliable and affordable gas over the long term.
“The government cannot expect industry to invest billions of dollars in new gas supply while introducing policies that fundamentally undermine the commercial viability of those investments,” Ms McCulloch said.
Addressing the National Press Club in Canberra on Wednesday after introducing legislation in the House of Representatives, Resources Minister Madeleine King said a “modest” oversupply would push down gas prices, which was a “very important” aspect of the scheme.
She argued it would be flexible and take account of exporters’ access to and volumes of gas.
“The whole reservation scheme does have an element of flexibility in it and that’s important because different exporters, whether they are exporting offshore from places around the country or onshore out of Queensland, simply have different access to different amounts and volumes of gas,” she said.
“So we do have to be flexible and make sure that the scheme does reflect reality.
“We all know having too little gas to firm renewables or provide for the manufacturing industry is as dangerous as having a massive oversupply which crashes the market, but also it can undermine investment in renewables so it’s a really fine balance that we have to achieve here. We are about getting the sufficient volume into the system to put that downward pressure on prices.”
Greens senator Steph Hodgins-May. Picture: Chris Pavlich
Greens senator Steph Hodgins-May. Picture: Chris Pavlich
Greens deputy leader Steph Hodgins-May said there was nothing in the bill that stopped it from being a “favour factory” between Ms King and “Labor’s favourite gas donors”, as she renewed calls for a 25 per cent gas export tax raising $17bn annually.
“They also have a choice to make Australians’ lives worse by going and doing a deal with the gas-guzzling Liberal Party and basically wedding us to a future of coal and gas and fossil fuel dependence as we stare down the barrel of an almighty El Nino … (or) do a deal for everyday Australians, work with the Greens,” she said.
Domestic gas producer Senex Energy, jointly owned by Gina Rinehart and Korean giant POSCO, accused the government of picking winners and losers with its gas reservation scheme.
Senex chief executive Darren Stevenson said the government had ignored warnings that deliberately oversupplying the domestic market would put downward pressure on prices at the expense of producers and the investment needed to develop new gas resources.
“The government has decided who will be the winners and the losers with this policy,” Mr Stevenson said.
“I encourage them to go to regional Queensland to apologise to those communities, small businesses and workers who will be demonstrably worse off under this policy.”