Originally published by Colin Packham and Perry Williams of The Australian
28.05.2026
Labor’s proposed gas reservation scheme amounts to “nationalisation by stealth”, the head of one of the country’s largest domestic producers has warned, in one of the sector’s strongest attacks yet on the Albanese government’s proposed gas reservation reforms.
Speaking at an industry event on Thursday, Senex Energy chief executive Darren Stevenson accused Canberra of moving towards political control of gas supply, and pricing through expanded ministerial powers over exports and domestic market obligations.
“The ministers are effectively taking control of the gas market,” Mr Stevenson said.
“We’ve invested private capital in that, and now they’re proposing to make it a black box where ministers can decide what to do.”
His remarks mark a significant escalation in the gas industry’s campaign against Labor’s proposed domestic gas reservation scheme, which is due to begin on July 1 following the start of formal consultations this week.
Under the proposal, LNG exporters would be required to redirect 20 per cent of export volumes – net of fuel use and existing domestic commitments – into the local market in a bid to create what Energy Minister Chris Bowen has described as a “modest oversupply” of gas designed to place downward pressure on prices.
But producers argue the policy risks destabilising the economics of future gas developments and creating a politically managed market that will deter investment at a time when east coast supply is already tightening.
Mr Stevenson said the reforms amounted to “the nationalisation by stealth of our natural gas industry”.
Industry concerns intensified following a call between producers and the Department of Climate Change, Energy, the Environment and Water on Thursday morning, during which officials indicated producers would still be required to supply gas domestically regardless of whether buyers were willing to pay commercially viable prices.
According to several industry participants on the call, the industry sought clarification on how the mechanism would operate if buyers demanded prices below the cost of production. Officials indicated the supply obligation would still apply.
The prospect of mandatory supply without an explicit commerciality safeguard has heightened fears of prolonged disputes between buyers and sellers, and raised the prospect of legal challenges as the industry attempts to interpret the complex policy framework.
Gas buyers are widely expected to push for sharply lower prices under the reservation mechanism, particularly after the government declined to include a formal “commerciality test” in the scheme.
MST Marquee head of energy research Saul Kavonic described the intervention as “a price control policy masquerading as a reservation policy”.
“There is simply no way for government to give effect to its intent to create oversupply without also taking a view on price,” he said.
The east coast gas market has already undergone repeated government intervention since the 2022 energy crisis, including temporary price caps, mandatory codes of conduct and strengthened export controls.
But Mr Stevenson, head of the gas company owned by Korean giant POSCO and billionaire Gina Reinhart, warned the latest reforms risked undermining Australia’s reputation as a destination for long-term energy investment.
“What makes you confident they’re not going to do the same thing in your markets?” he said, warning interventionist policies could ultimately spread beyond energy into other sectors of the economy.
“This is very scary, and it’s a problem that’s coming for all of us. The gas industry is just at the front.”
The federal government has faced mounting political pressure from manufacturers and large industrial users to reduce domestic gas prices, with some business groups advocating for a tougher reservation system similar to Western Australia’s longstanding domestic gas regime.
Yet producers argue east coast economics differ sharply from Western Australia, particularly given the higher costs associated with developing “dry gas” fields.
“We aren’t going to invest unless we can recover our capital and make a modest profit,” Mr Stevenson said.
“If you’re hoping to do a long-term deal for a lot of gas for $8, I don’t know who’s going to sell you that gas.”
In unusually candid remarks, Mr Stevenson also acknowledged the industry faced a worsening social licence problem despite broad public support for gas as an energy source.
“One of the federal opposition ministers said to me: ‘People do like gas, but they don’t like gas companies’,” he said.
“It is absolutely true. We are getting our asses kicked in social media at the moment by very clever, simple messaging.”
Mr Stevenson also linked Australia’s LNG exports to broader national fuel security concerns, warning policymakers risked overlooking the strategic trade relationships underpinning refined fuel imports into Australia.
He noted Australia exported 11.4mn tonnes of LNG to South Korea last year, while South Korea supplied 11.6mn tonnes of diesel, petrol and jet fuel to Australia.
“We are playing a very risky game,” he said.
While the government has repeatedly insisted it does not intend to undermine LNG export contracts, Mr Stevenson warned many long-term agreements begin expiring from 2031 onwards.
“Are we going to stop wanting diesel delivered to Australia in 2031?” he said.
“I don’t think so.”