Australia relaxes East Coast Gas Reservation Rule for LNG Exporters

Australia relaxed slightly on Thursday a proposed rule which would have forced energy exporters 'to reserve a fixed 20% of natural gas for its East Coast market, but instead required them to reserve as much as a fifth.

Energy Minister Chris Bowen stated that exporters could provide an additional 200 petajoules per year. This would be more than enough to prevent the potential shortfalls predicted by the energy market operator.

Bowen, in a press release, said that the proposed policy will "ensure gas is more affordable" and that there is always a modest?oversupply on the domestic market.

In May, the centre-left Labour?government proposed a 'hard 20% gas reservation scheme' for the East Coast. The government announced a plan in December to reserve 15% to 25% of the gas.

The reservation scheme will affect three LNG export projects operated by Origin Energy and Shell on the East Coast.

Australia is one of the largest LNG exporters in the world and ships more gas abroad than it consumes at home. The majority of Australia's vast?gas reserves, however, are in the northwest. This is far from the southeast, which has a higher population.

Western Australia has its own reservation scheme that requires offshore gas export projects to divert 15 percent of their gas into the local market.

(source: Reuters)