Australia requires LNG exporters to retain a minimum for the home market
Australia's new scheme will require exporters of liquefied?gas to keep up to 25% of their output for domestic use. The plan was announced on Monday in an effort to curb price spikes and fill a supply gap that has been predicted.
The government of Anthony Albanese, a centre-left Prime Minister, said that it would work closely with exporters to create a system which limits the amount of domestic gas. A minimum allocation at local level is between 15 and 25 percent.
The government announced the number of a policy that it had flagged for 2025, amid warnings of a gas shortage on Australia's east coast where 27 million people live.
"More affordable Australian Gas for Australian Users will Support Our Economy and?Our Transition, While Remaining a Reliable Energy Partner to Our Region," said Climate Change & Energy Minister Chris Bowen.
Bowen stated that the proposal would only apply to 'new contracts signed by LNG exporters and not existing contracts.
Australia exports more?gas that it consumes. The competition regulator said on Monday the local shortfall was now larger than expected, as the output from the legacy fields near the south coast has dropped.
A review of the gas market, ordered by government for mid-2025 and published also on Monday, recommended this scheme.
The review stated that a gas reserve scheme would bring down prices. It also urged the government consider ending A$12 ($7.94), per gigajoule, price cap which has been in place since 2020.
Bowen said in his statement that the government's gas reservation scheme will be based upon the review recommendations. However, he did not mention whether it would gradually eliminate the price cap.
The scheme will affect three LNG export 'plants in Queensland. Gladstone LNG is one of them. It is operated by Santos, and backed by Korea Gas Corp. (KOGAS), TotalEnergies, and Malaysian Petronas. The company has traditionally relied on third-party gas from domestic sources to meet its export commitments.
Unable to comment, a GLNG representative could not be reached for immediate comment.
Neither Origin Energy nor ConocoPhillips, or Sinopec, nor Queensland Curtis LNG, led by Shell with CNOOC, or MidOcean Energy were able to comment.
Andrew Richards, CEO of the Energy Users Association of Australia said: "This recommendation puts in place an sensible regime that was always there." $1 = 1.5106 Australian Dollars (Reporting from Byron Kaye, Helen Clark and Sneha Kumar in Bengaluru. Editing by Rashmi aich and Sonali paul)
(source: Reuters)
