Australia is preparing to review its gas market, which could affect LNG exports

Australia will soon issue a review of the gas market that could limit exports from its east coast. Three operators, led by Shell and Santos, send cargoes to Asia.

They said that the review, which they expect Canberra to release this week, may 'include a plan for LNG exporters to prioritize local supply in the populous east, the main source of domestic demand.

Tony Wood, energy analyst at Melbourne's Grattan Institute, said that the government is trying to solve a difficult problem. They want the domestic and international markets to be able access gas at a reasonable price.

Unnamed industry sources, who spoke on condition of anonymity, said that the review will likely be a framework with more detailed measures to follow in early 2026.

All three consortiums could be affected but industry observers believe Gladstone LNG, operated by Santos, and backed by South Korea’s Kogas, TotalEnergies, and Malaysia’s Petronas, may face the most scrutiny.

GLNG relies heavily?on domestic gas from third parties to meet its export commitments. It takes large volumes of gas from the local market in order to fill contracts that its coal seam gas fields are unable to supply.

Other eastern exporters include Australia Pacific LNG, led by Origin Energy, with ConocoPhillips, and Sinopec and Queensland Curtis LNG, led?by Shell, with partners CNOOC, and Tokyo Gas. Both have met their contracts and sold excess gas as spot cargoes, or on the domestic market.

Both parties have asked that the three producers in the east contribute equally to domestic gas market until new sources of gas are available.

APLNG's August submission to this review stated that "targeted investment in gasfield development near demand centers is crucial to ensure supply security" in the long-term.

The Labor government has promised to honour existing agreements, but Shell criticized the approach in August for APLNG and uncontracted volumes coming from its facility to be used as a backup for what they called systemic supply problems in southern states.

Shell sent a press release to the following address: "A simpler model for reservations will strengthen the domestic markets, support an export industry that is vibrant and encourage future investments."

It added that such a model would be based on active measures to increase the supply rather than current rules which focus solely on non-contracted volumes.

GLNG didn't immediately respond to a comment request.

The review does not affect projects in the west and north of Australia. Australia is the third largest LNG exporter in the world.

Export and Price Controls

Queensland coal seam gas and six export trains in Gladstone are the foundation of Australia's east-coast LNG industry.

Manufacturers complain about the lack of long-term contracts and the rising prices of Australian spot gas for power since exports began in 2015.

Since 2017, both the energy market operator as well as the competition watchdog have warned about gas shortages.

Since then, successive governments have placed controls on prices and exports.

Wood stated that "Both sellers and buyers want a real market, not constant intervention by the government."

The longer-term solution to the gas shortage is more supply, said Tor McCaul. Comet Ridge produces gas in Queensland. It sells some of it to Santos, and develops more for the domestic markets via permits. Helen Clark is reporting; Tony Munroe, Clarence Fernandez and Clarence Fernandez are editing.

(source: Reuters)