Article by Perry Williams, courtesy of the Australian.
12.06.2025
A Commonwealth review of three major policies that regulate the east coast gas market will consider any impact to Australia’s reputation as an investment destination while leaving the door open to unspecified government “initiatives” to boost domestic supply.
The draft terms of reference issued on Wednesday listed eight separate areas of scope as part of a legislative review of the Australian Domestic Gas Security Mechanism, known as the gas trigger and the controversial $12 per gigajoule cap on wholesale prices contained in the Gas Market Code.
Among the priorities for the industry is delivering affordable prices and ensuring sufficient domestic supply amid speculation over a potential domestic reservation scheme along with underwriting LNG imports to head off a domestic shortfall set to hit in 2028.
“Consideration will be given to the merits of alternative approaches to the security of supply and whether there is scope for Commonwealth initiatives to improve security of domestic supply in the medium to long term,” the document states.
The review also spans market transparency between gas producers and buyers; along with market conduct and good faith rules “with a view to proposing reforms that recognise contribution to the domestic market when ensuring security of domestic gas supply”.
Australia Pacific LNG (APLNG), part-owned by Origin Energy alongside a consortium of global giants, and Shell Energy’s Queensland Curtis LNG (QCLNG) have been on edge over the issue of uncontracted gas when it emerged they may be on the hook to carry an increased burden under a mooted Coalition policy.
Santos’ own LNG facility, Gladstone LNG (GLNG), is entirely contracted so has no excess supplies that would be diverted under the Coalition’s policy. Industry figures insist GLNG has exacerbated the domestic supply issues.
The review will also consider the impact of the policies on the “competitiveness of Australia’s LNG export industry, investment reputation and Australia’s international trade reputation for quality and reliability.”
Japan’s biggest LNG buyer in March delivered a bombshell to Australia’s $70bn export industry, saying it will look to rival nations for supply it and warning of thousands of job losses unless urgent policy changes are made to fix the state of the local industry.
Relations between the gas sector and the federal government have remained strained since Labor introduced sweeping market reforms in late 2022, notably the controversial $12 per gigajoule cap.
This policy, designed to shield households and manufacturers from soaring energy costs, triggered fierce opposition from producers who claim it has undermined investment certainty and supply security.
Resources Minister Madeleine King in May told Australia’s gas industry to curb its attacks on government policy and instead engage in a constructive dialogue with the re-elected Albanese government after three years of sparring.
UBS estimated LNG imports on Australia’s east coast will increase domestic gas prices by $2 a gigajoule as market pricing shifts to the mooted supply source.
Viva Energy and Andrew Forrest’s Squadron are both developing LNG import terminals to offset a forecast gas shortage due to hit in 2028.
The broker estimates winter 2027 is the earliest an LNG import terminal is likely to be connected given delays announced by Squadron and additional hurdles still faced by Viva to progress its Geelong facility in Victoria.