The Federal Government’s proposed national domestic gas reservation represents a major reform to Australia’s east coast gas market and the latest in a long series of interventions.
Its design will have significant implications for Australia’s energy security, our role as a reliable regional energy partner and our future economic prosperity, so it is critical to get it right.
The Australian Competition and Consumer Commission, the Australian Energy Market Operator and the Government’s Gas Market Review have highlighted how past interventions, including price caps and the Gas Market Code, have likely weakened the supply outlook by deterring investment, discouraging long-term contracting and muting market signals.
These findings offer an important lesson for the next phase of reform. Australian gas producers support a well-designed, prospective scheme for the east coast gas market as part of the response to forecast supply challenges, but it must be backed by policies that support continued investment in new supply and faster approvals.
Increasing supply is the only sustainable way to put downward pressure on prices.
Recent EnergyQuest analysis we commissioned reinforces this point, finding average east coast gas prices in 2025-26 were around $10 a gigajoule, while LNG prices paid by our international trade partners were more than 50% higher at around $15.65/GJ. The spot price gap has widened further over the past six months amid conflict in the Middle East.
Reliable domestic supply is helping insulate Australian households and businesses from volatile international gas prices. Sustaining that advantage requires continued investment.
The exposure draft legislation released last month for consultation included several welcome changes, but significant concerns remain. The proposed ‘forced sale’ requirement, combined with a requirement to oversupply forecast domestic demand by 10%, risks weakening investment signals, crowding out domestic-focused producers and discouraging the very supply Australia needs.
Our submission recommends a genuine offer obligation in place of an effective forced-sale requirement, supply obligations calibrated to maintain a balanced domestic market, recognition of genuine infrastructure constraints and protection for Western Australia’s existing reservation framework.
Getting these settings right is critical because Australia must compete globally for the capital needed to develop the next generation of gas projects. Investors need confidence that the framework will support a competitive, sustainable market.
The Government could introduce legislation in the Parliament as soon as next week, with the aim of securing passage by the end of the year. The Federal Opposition has indicated its willingness to engage constructively and outlined its principles for supporting the reforms.
This creates an opportunity to secure bipartisan agreement on an enduring framework that encourages new supply, maintains competition and strengthens Australia’s long-term energy security. Australian Energy Producers will continue working with the Government, Opposition and members to achieve that outcome.
Samantha McCulloch, Chief Executive of Australian Energy Producers