Originally published by The Australian.
25.06.2026
Woodside Energy’s lucrative gas drilling project hangs in the balance until there is clarity around the Albanese government’s domestic gas reservation scheme.
The $52bn energy giant says the project could deliver enough gas to supply Sydney or Melbourne for nearly two years.
It marks one of the clearest signals yet that investment decisions are being influenced by the policy.
Woodside is poised to take over as operator of the Gippsland operation after striking a deal with Exxon last year. At the time, then Woodside chief executive Meg O’Neill said the deal illustrated its desire to bolster east coast production.
The company had indicated it would be ready to approve the drilling campaign, but CEO Liz Westcott said the project could be scuppered should Labor’s east coast reservations scheme upend the market – much like the domestic gas industry has warned.
Should Woodside fail to proceed with the Gippsland campaign, it would be the first casualty of the reservation scheme.
In her first major address in Canberra since becoming CEO, Ms Westcott said Woodside had identified four potential development wells in the Gippsland Basin capable of supplying up to 200 petajoules of gas to the east coast market. But cautioned the project would only proceed if the economics stacked up under the government’s proposed intervention.
“Technical maturity and the impact of the Federal Government’s new domestic gas reservation scheme will influence whether we progress this opportunity to a final investment decision,” Ms Westcott said.
The comments represent the strongest indication yet from Australia’s largest gas producer that Labor’s plan to require LNG exporters to reserve a share of exportable gas for domestic buyers could affect future investment, even as the government argues the policy is needed to avert forecast shortages on the east coast.
Labor has indicated it will require Australia’s LNG exporters to withhold 20 per cent of their exportable volumes for the domestic market, which opponents insist will cause a dramatic oversupply of the local market that send domestic prices below production costs.
The Gippsland Basin has supplied gas to eastern Australia for more than five decades but production has steadily declined as reservoirs mature, increasing pressure to develop new fields to avoid supply shortfalls later this decade.
Woodside is preparing to assume operatorship of the Gippsland assets it jointly owns with ExxonMobil and Mitsui following the completion of its acquisition of the assets. Unlike many of Australia’s LNG developments, gas produced from Gippsland is sold entirely into the domestic market.
Speaking at the Committee for Economic Development of Australia conference in Canberra on Thursday, Ms Westcott said the four prospective wells could deliver up to 200 petajoules of gas, equivalent to enough energy to power every home in Sydney or Melbourne for almost two years.
The intervention comes as Labor finalises details of its national gas reservation scheme, announced during the election campaign, which is intended to increase domestic gas supply and reduce pressure on prices. The government has argued new gas supply remains essential to the energy transition but wants a greater proportion made available to Australian households and manufacturers before being exported.
Resources companies have warned uncertainty surrounding the policy could deter investment in new developments.
Ms Westcott said Australia needed stable and predictable policy settings to attract the billions of dollars required to develop new gas projects.
“The best way to secure more energy and additional tax is through progressing new supply that can shore up Australian prosperity, not through policies that could erode it,” she said.
She also renewed Woodside’s opposition to calls for higher taxes on LNG exports, arguing a proposed 25 per cent levy would have rendered Australian LNG projects “un-investable” while undermining domestic energy security.
Beyond Gippsland, Ms Westcott used the speech to make the case for the development of Browse, Australia’s largest undeveloped offshore gas resource, saying the project could generate thousands of jobs, billions of dollars in economic activity and more than $55bn in tax revenue while supporting Australia’s energy transition.
Ms Westcott said natural gas would remain an essential part of Australia’s energy mix for decades, backing up renewable generation while supporting industries including artificial intelligence, data centres, advanced manufacturing and critical minerals processing.