Australia requires LNG exporters reserve 20% of their gas for the east coast market
The Australian government announced on Thursday that 'energy producers should reserve 20% of the natural gas they produce for the domestic market on Australia's east coast to avoid supply shortages and lower energy costs.
The government announced that the scheme would be implemented in July of next year, and will replace several current market interventions.
The reservation scheme will affect three liquefied gas export projects on the East Coast operated by Origin Energy?, Shell?, and Santos.
"This is an incredibly well-? calibrated model that ensures Australia's best interests come first", Energy Minister Chris Bowen told reporters.
"This policy will not be liked by everyone, but it is good."
Bowen stated that the scheme will apply to future contracts as well as the spot market. He added that it won't affect existing contracts.
It will put downward pressure on the prices. He said that it would also, to some extent, isolate Australian gas from the spikes in international prices.
Australia is the largest LNG exporter in the world and ships more gas abroad than it consumes at home.
The majority of the country's gas reserves are in the northwest. This is far from the southeast, where the demand is most concentrated.
Western Australia already has a reservation scheme that requires gas exporters to divert 15% of the gas they sell into its local market. Reporting by Renju José and Christine Chen, Sydney; Editing and production by Jacqueline Wong & Christian Schmollinger
(source: Reuters)
