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2026-05-25 14:05:55
[Australia Proposes Requirement for LNG Exporters to Reserve 20% for Domestic Use, Existing Contracts Unlikely to Be Exempt] (1) The Australian government has released a draft policy requiring liquefied natural gas (LNG) producers to reserve 20% of their exports for domestic use. The policy is expected to apply to all projects and existing contracts, with export contracts signed on or before December 22, 2025, to be "respected," provided that the project can demonstrate its inability to fulfill its domestic supply obligations without breaching the contract. (2) The industry strongly opposes the proposal, arguing that it will stifle investment and damage Australia's reputation as a reliable exporter. This move is intended to address anticipated gas supply shortages on the east coast, while the Iran war has prevented approximately one-fifth of global LNG supply (mainly from Qatar) from entering the international market. (3) In addition to directly reserving gas, companies can fulfill their obligations by purchasing gas from third parties, regional swaps, reducing export deliveries, or sourcing LNG from their global portfolio and international markets. The proposal aims to create a "moderate oversupply" in the domestic market, after which regulators can allow the surplus gas to be exported, thus the actual impact on Australian exports will be far less than 20%.
