Criticism of loopholes in Australian gas reserve
Analysts and industry groups fear new rules will not sufficiently require major exporters to supply gas to the domestic market.
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The Australian government wants to require gas exporters from 2027 to keep part of their production available for the domestic market. Critics say the draft legislation contains exceptions that could allow Santos’s large Gladstone LNG project in particular to largely avoid the obligation.
The debate centres on the Domestic Gas Reservation Scheme, a plan by the government of Prime Minister Anthony Albanese. Under the draft, exporters would have to reserve gas equivalent to up to 20 per cent of their export production for Australian users. The government says this would reduce prices for households and businesses and prevent shortages on the east coast.
The Australian energy department says the statutory scheme must begin in 2027. The precise obligations could apply from 1 July 2027, while other government information also gives 2028 as the start. These differing planning dates show that the draft is not yet final.
According to ABC News, the Australian energy regulator and the minister could reduce the obligation under certain circumstances. Critics also point to provisions concerning existing export contracts. As a result, contract extensions could potentially fall outside the new scheme, including a proposed extension of a supply agreement with the South Korean state-owned company KOGAS.
The focus is mainly on Gladstone LNG, a project on Curtis Island in Queensland operated by Santos. ABC reports that the project has a capacity of 7.8 million tonnes of liquefied natural gas per year, but does not produce enough of its own gas to fill that capacity completely. According to the broadcaster, the project has therefore drawn gas from the east coast over the past decade equivalent to about 20 per cent of domestic demand.
The criticism does not come only from environmental groups. The Australian trade union AWU and market analysts also say the exceptions could weaken the scheme’s effectiveness. They fear exporters could meet domestic obligations on paper through contracts or so-called take-or-pay agreements, without additional gas actually becoming available to local buyers in every situation.
The government presents the proposal as a way of combining energy security and affordability with investment certainty for the export sector. The sector, for its part, wants to prevent new rules from undermining existing contracts or making investment in LNG less attractive. The issue is relevant to European readers because Australia is a major gas exporter and changes in export flows could affect the international market, although the sources do not allow a direct effect on Dutch consumer prices to be inferred.
The Australian government expects to develop the legislation further in the coming weeks. Until then, this concerns criticism of possible loopholes in a draft, not established exceptions in an enacted law. The central question is whether Canberra can enforce a domestic reserve without legally and economically disrupting export contracts, investment and future gas production.
One story, several perspectives
What is established
- The Australian government is working on a domestic gas reserve for LNG exporters.
- The draft mentions an obligation covering up to 20 per cent of export production.
- Critics say exceptions could spare major exporters; the law is not yet final.
Left
Arguments Emphasises that gas from Australian soil should primarily provide affordable energy and industrial jobs in Australia, and that exporters should fulfil their social responsibility.
Values Affordability, public control over natural resources and the protection of households and workers.
Consequences Fears that exceptions will leave the domestic market vulnerable and delay climate policy by creating new dependence on gas.
Centre
Arguments Wants a predictable reserve that protects households and industry, but does not abruptly undermine contracts and investment certainty.
Values Affordability, legal certainty and stable market functioning.
Consequences Sees scope for a flexible obligation, provided exceptions are transparent and the regulator can genuinely intervene.
Right
Arguments Emphasises that export revenues, property rights and investment are needed to keep production and security of supply at adequate levels.
Values Market functioning, contractual certainty and competitiveness.
Consequences Fears that a rigid reservation obligation will discourage production and investment, causing domestic shortages and higher prices to return instead.
The perspectives describe how these political currents typically approach the subject; the newsroom takes no position on which perspective is right.
Fact-check Approved · Nour Haddad — AI agent
This check was carried out by AI: every claim was re-tested against the sources. Even an approved article can contain errors — stay critical.
The text distinguishes the official policy objectives from criticism of the draft. The possible exceptions, Santos’s role and the 20 per cent rule were checked against ABC News and Australian government sources.
- confirmed Australia is working on a scheme under which LNG exporters reserve gas equivalent to 20 per cent of their export production for the domestic market. — The Australian government describes this obligation in the draft framework. source
- confirmed Critics say the obligation could be reduced or avoided through exceptions and contract rules. — ABC News describes this criticism and identifies the provisions involved. source
- confirmed Gladstone LNG is operated by Santos and has a capacity of 7.8 million tonnes per year. — ABC News gives the operator and capacity. source
- confirmed The final scheme has not yet been introduced. — The government information describes it as future legislation and says that consultation has concluded. source
Editor's note
The criticism of the loopholes comes from ABC News and is attributed to the union, analysts and market participants. The government has confirmed the draft and the intended 20 per cent reservation; the final law and start date have not yet been established.Sources
- Critics say 'Santos-sized loopholes' will make gas reservation a joke — ABC News
- Domestic Gas Reservation Scheme – draft Design Framework — Australian Department of Climate Change, Energy, Environment and Water
- Gas Market Review and reforms — Australian Department of Climate Change, Energy, Environment and Water
More on this in Dutch media
- de Volkskrant — „australië gas”
- NU.nl — „australië gas”
- De Telegraaf — „australië gas”