IN FULL: Government announces east coast gas reservation | ABC NEWS

Added: 2026-05-09

[00:00:00]Australian gas use is coming down. This uh last quarter that's just gone, the first quarter of 2026 saw the lowest gas use in 26 years. The lowest gas use since 1999. That's batteries and renewable energy displacing gas in our energy system primarily. That's a good thing. That's part of our transition.

[00:00:19]But as that gas use comes down, it does not mean it becomes less important. less important for heavy industry, less important to support renewables, less important for those Australians who are still using gas for home heating and cooking. While many Australians are making a choice to move away from it, those Australians who are still doing it rely on it. So, this is an important policy that gets the balance right. It applies to prospective contracts uh and the spot market. We will not disturb any existing contracts. uh we have consulted closely and worked closely with trading partners to ensure that it's well understood around the world that Australia will always be a reli a reliable supplier of energy but we'll be a reliable supplier of energy with Australian needs being catered for and Australian needs being met. Australia has been the only gas exporting country in the world without some form of reservation. That changes under the Albania government. A sensible reservation policy a reservation policy which has been carefully designed. And I want to thank Meline and Tim and the entire cabinet uh but Meline and Tim in particular uh for working so closely together, the three of us on this. This is a policy uh which will obviously not please everyone. Uh often good policy doesn't. Uh but it's good policy uh which puts Australia's national best interest first. Uh Meline and then Tim.

[00:01:35]>> Thanks. Thanks Chris. And uh I also want to acknowledge the great work of Chris and also Tim and also to acknowledge uh Foreign Minister Penny Wong in developing uh this policy. So really very importantly, the gas reservation scheme will be working to ensure that we keep more Australian gas here in Australia for Australian homes, for Australian businesses, and for Australian industry. So I'm going to take you through a bit of the background to this. For about a decade, our domestic gas policy settings have really been shaped by uh intermittent crises in uh global markets. Uh we saw this most recently, I suppose, in 2022 uh when the Albany government was first elected amidst a a global energy crisis which was felt here uh in um the the surging of gas prices and that was compounded by uh outages in coal fired power stations at the time. So in response to that crisis, we acted quickly, reformed the domestic gas security mechanism, which the Morrison government had failed to extend. We signed new heads of agreement with the LG producers on the east coast uh to ensure there were surplus supplies for Australian users. And we introduced uh the gas market code and a price cap.

[00:02:44]And people will recall we went back to parliament to make sure that happened and in doing so went on to secure 644 pedigogles of uh gas for domestic purposes. Now all of these policies have worked to stabilize uh the gas market and place that downward pressure on gas price but it is a collection of policies uh developed in an ad hoc fashion over many years. So really importantly, what we're announcing today, have been working on for a number of months and will continue to work on after today uh is a very important and historic structural shift in Australia's domestic gas market policy settings. And it will ensure that we have stable and really importantly long-term policy settings that will drive a permanent wedge between international and domestic gas prices. And I really can't overstate the significance of the reform we're all talking about uh today. And our gas market, our gas market prices uh will no longer be hostage uh to international markets. Uh Chris has mentioned this will require LNG exporters to supply 20% of their total export production uh into the domestic market. It will commence uh on the 1st of July 2027.

[00:03:56]uh so this will put uh we expect and uh we're doing this because it will put uh downward pressure on uh gas prices uh and I'll just speak a bit about how that will happen. So from July next year, if the LNG uh exporters want to access uh the uh quite lucrative from time to time international spot market, they will need to demonstrate to me as minister that they have actually and properly supplied the domestic market. Uh and for that to happen to get an export uh approval that's means they have to go further than simply offering gas which is the current requirement. they have to actually supply. Uh so that that means uh it's a structural shift which changes the bargaining uh balance and creates really a buyers market for domestic gas uh buyers whether that be for for power uh for indust industry uh indeed and that's how we expect it'll drive down uh gas prices. Uh Chris has mentioned of course will preserve uh all foundational uh and existing uh contracts. Uh we also are doing streamlining reforms. Uh we will remove the Australian domestic gas security mechanism, remove the heads of agreement and reform the gas market code in an appropriate way. Uh and it is a product of the gas market review. Of course, there has been significant consultation with the gas industry and I welcome their continued support uh and engagement as we immediately commence further detailed consultation. I'll hand over to Tim in a moment to speak on the the the reservation, but I have a couple of other items very quickly. I'm happy to confirm as joint authority the Victorian Commonwealth government's approved the new petroleum production license for the anti- gas field. Many of you will have seen that uh reported earlier in uh the day. Uh and we will also as the Commonwealth government uh be seeking nominations of new areas for offshore petroleum exploration of Victoria and Tasmania. Uh this will be uh on an expression of interest basis uh and information will be available on the department of industry science and resources website shortly uh after this time. And with that I'll hand over to Tim.

[00:06:11]>> Well thank you uh Meline and Chris. I want to um thank you all for being here.

[00:06:17]This is a very significant landmark labor reform. Uh for far too long, Australian industry has faced very high gas prices. Uh and the uh the policy structural framework around that has led to the kind of necessary and ad hoc interventions that subsequent governments have had to make since Australian industry face global prices for gas.

[00:06:46]This decision to reserve 20% of exports.

[00:06:50]Australian gas reserved for Australian industry and Australian households is a landmark labor reform. I want to thank my I want to thank my colleagues uh for the way that we have worked together and the whole cabinet has worked together in a careful way in a deliberate way to deliver uh this landmark structural reform for the Australian gas sector and for Australian industry. I just want to explain what this means in our outer suburbs and our industrial regions for Australian industry. Uh what it means for those facilities uh that are facing higher gas prices now is that they will see the lowest possible gas prices uh over uh the coming years and a certain investment horizon.

[00:07:43]Uh and if if those uh current domestic manufacturers making fertilizer uh uh making iron and steel products uh our foundational manufacturers uh now have certainty about what the shape uh of the gas market will be. that will lead to more jobs, more blueco collar jobs, more engineering jobs in our regions and in our suburbs.

[00:08:13]Secondly, in terms of future investment, uh what what this does is make it clear for iron and steel investments, for critical minerals to critical metals projects, for advanced manufacturing processes, particularly where gas is a feed stock and is engaged in a in a chemical production process, that there is certainty uh about the lowest possible prices in Australia and that this becomes part of our future energy competitive advantage foundational for a future made in Australia. Uh I'm really pleased uh that we're able to announce this today. I'm looking forward to the next couple of months as we engage with industry on some of the detailed uh policy settings uh that we will have Australian gas 20% of exports reserved from the middle of 2027 to strengthen Australian industry uh to build our manufacturing and industrial capacity uh and to make Australia stronger.

[00:09:16]>> Thanks Tim. Thanks Mlin. Over you Lachland. Minister, uh, this scheme will effectively flood the domestic market, which will be a fill up to manufacturers, but also significantly harm the prospects of new domestic production being economic. Does the government not want to encourage new sources of supply?

[00:09:32]>> I'm going to hand to Meline to add, but there's some assertions, Ed, Lachlan, which I just don't agree with. Um, I've seen some commentary to that effect in your newspaper this morning, but that doesn't make it true. It's a modest overupp which we have carefully calibrated. Uh, we've consulted right across the board. Um, we think those yearly, twice yearly warnings of gas shortages in one of the biggest gas producing countries in the world are a problem. We want to see them go away.

[00:09:57]This policy makes that go away. That's a good thing, not a bad thing.

[00:10:01]>> Thanks, Chris. So, um, domestic gas only produces a really important to the the ecosystem of uh, supply of gas uh, in in the country. Uh I've consistently said uh if gas has less distance to travel, it will be more affordable for for those that uh buy it, whether that be households, businesses, industrial manufacturers. So that that is why they play an important role. We've been speaking to all parts of the gas industry, the gas producing industry uh during the domestic uh gas review that we've been undertaking, a gas market review, pardon me, and uh no doubt we'll be speaking to them again uh through the consultation process that we're about to undertake. You don't think it will hobble?

[00:10:44]>> No. And just to add, I mean, you know, again, people, as I said at the outset, this is not going to be uncontroversial.

[00:10:50]Uh we know that. But look, people said similar things when the Western Australian government introduced their gas reservation policy. what 15 20 years >> um you know people said it would be the end of gas in Western Australia when the Gallup Carpenter government introduced a gas reservation policy. I'm not sure that's how it's turned out in Western Australia and it's not how it will turn out here and I'm I should say we'll be working closely with the Cook government and I've already uh communicated with Minister Sanderson this morning. We'll make sure that the two policies align uh very carefully and closely.

[00:11:20]>> Can you guarantee today's announcement will bring down gas prices for Australia? It's going to it's going to put downward pressure on prices. And what it will also do is to a certain degree disconnect Australian gas from spikes in international prices. When the Ukraine war um occurred, we saw gas prices spike around the world. If this policy had been in place, then that would have had a much lesser impact on Australia.

[00:11:44]>> Here, everyone gets to go in my press conferences famously. You'll all get a chance here. Uh question for Miss B and also for Minister um in setting the 20% um reservation threshold. Um how much of a consideration was ensuring uh there's enough gas fired uh power generated for uh the forecast data center growth in >> Well, it's part of the mix. Um you know, we look at the ISP, we look at the um gas statement of opportunities, we look at the needs for um gas generation. As I said, gas fired power stations are a useful support mechanism for renewables.

[00:12:15]That's the case with growing electricity demand. is the case without growing electricity demand, but obviously growing electricity demand, we've had two quarters of record electricity demand and the grid has coped very very well because of renewables and batteries and also because of gas.

[00:12:28]>> Yeah, I I want to underscore Chris's last point and we we went through the last summer. I can't remember a summer where there haven't been uh warnings uh or challenges in our electricity sector about brownouts and electricity shortages. that did not happen this summer. Uh that is really important for households. A turning point uh in the reconstruction uh of our electricity system uh that I think in no small part Chris and the reforms that he has introduced can take credit for. It's also really important for industry uh and and of course for the growing digital infrastructure investments that will happen in Australia. Uh Andrew Charl Chton and I released just a few weeks ago the data center expectations that are being embraced by industry uh and we are engaged very closely with our colleagues at the state level. Uh gas will play an important part in our electricity network. But as a result of those investments, there will be additional generation uh invested in, underwritten and installed that will put downward pressure on electricity prices too. And so to confirm when you talk about a modest over supply in the market, does that include the forecast demand from data center?

[00:13:49]>> Yeah, it includes all the best forecasts we have available to us. Yes.

[00:13:52]>> So Mr. King, if I can ask specifics on prices. So at the moment gas is around 12 to$14 per kjle. How much do you see the gas price falling under this policy?

[00:14:05]Uh as Minister B, we've both been consistently said uh we expect this to put quite strong downward pressure on prices. uh and the reason is because of that flip in the market where instead of it being all in the really the the uh offering power of the producers we've created buyers market where those producers to get that export approval have to compete among themselves for contracts to supply to actually supply not just offer to the entire domestic consumption market. So we do expect that's a very big change and not to be underestimated uh and and we expect that to be a very strong influence and putting downward pressure on prices.

[00:14:47]>> Okay. So under previous uh governments, Peter Dutton um talked about the 20% reservation and talked about a 3% reduction um in the bills. Is that your modeling?

[00:14:59]Is that what >> that is someone else's work and no we do not follow someone else >> modeling of what?

[00:15:04]>> No, we have done a a a great deal of work. We've had many many discussions.

[00:15:09]Uh we are not following the policies of anybody else. Uh all what we have done since coming into government is reformed existing policies to make them actually work at a moment when they were failing entirely to to help Australian gas consumers. And now we have worked on on our very own with our own departments, our own motivations and that is to make sure that Australians have access to affordable gas over the long term. and we have done the work through our various departments and that is what work this policy is based on.

[00:15:41]>> I'll just add No, no, hang on. I'll just add to that and then you've had you've had several questions. I'm going to add to it and then I'm going to go to someone else and then if there's time we'll come back to you.

[00:15:48]>> Uh as Maline said, what this policy does is put downward pressure on prices, but we also always recognize there are many impacts on prices. the cost of extraction which is going up uh the international price uh which can go up and down you know and with factors well out of control of Australians with bombings and wars and other things but what this does with taking into account all those differing impacts on uh gas prices gives Australians the best chance at lower prices. Yes.

[00:16:15]>> The government recently ruled out putting a tax on gas exports in the budget. Do you see a gas reserve as equivalent to a tax on gas? And does this mean you ruled out over doing a gas? Well, they're very different things, but this is I think what this does show uh to be very frank is that we are prepared to act in the national interest and there'll be people who are annoyed about this decision who would rather just let the market rip and let them export whatever they like. I understand that. But we have a different job. Our job is to put Australians national best interest first and that's what we're doing today.

[00:16:45]>> You're not ruing out gas.

[00:16:46]>> Well, the prime minister and on behalf of the government has made it clear that's not something we're doing in this budget.

[00:16:51]>> Lachland again.

[00:16:52]>> Got an in-depth one. the in-depth one.

[00:16:54]>> Does does the scheme apply to contracted and uncontracted gas? And if it's just uncontracted, Gladstone LG, which is owned in part by Santos, which has caused significant disruption uh to the market by buying domestic gas to its board >> will be exempt.

[00:17:14]>> Will be exempt. So does that mean not mean rivals APL NG and GC LNG will be disadvantaged by that?

[00:17:22]>> I'll go first. Mal can add what this uh policy applies to is the spot market >> and and uncontracted gas i.e. when foundational contracts come off when the contract has run its course and the company seeks to enter into a new contract that's when the reservation policy will apply. Yeah. So in the the the scheme you mentioned the three uh Curtis Island uh exporters uh and we're going to go through like starting from today a more detailed consultation process about how we work with with each of those exporters and how we have provisions that allow for uh them to be able to access an export approval on the basis of what they provide domestically.

[00:18:01]That's going to take a bit of work. It's going to be quite detailed but we are going to do it quickly. uh no one uh this is this is across the board it's national uh no one is exempt uh but we will go through a process as that Minister Bowen said uh with the Cook government around how the Western Australian existing domestic gas reservation policy is taken into account. We will go through a process with the Northern Territory around how we work with them to make sure it's accounted for. there will have to be provisions uh across the implementation of this to account for a number of factors uh including simply uh restraints uh that exist currently on delivery of gas. So there's a lot to do uh but we are committed to making sure that again Australian consumers get access to affordable gas uh into the long term.

[00:18:49]>> You mentioned delivery of gas there. So the big issue is coming up in the later part of the 2020s into the 2030s is that peak day shortfall in Victoria, Southern Australia, seasonal shortfalls. How concerned are you about the availability of gas infrastructure to actually meet that despite this?

[00:19:05]>> Yeah. So this policy will see those shortfalls dealt with. That's a big part of why we're doing it.

[00:19:10]>> Infrastructure to to carry >> and I'll get to and I'll get to the infrastructure. Um so that's a big part of you know we think it's just unacceptable for Australia to continually have and they've had it under the previous government and under us although it's been getting further away and smaller under us um those gas shortfalls forecast because that provides uncertainty for industry in relation to infrastructure it's a fair question that infrastructure so that they can meet their obligations you know we think this supply obligation is not just about you know um making gas available it's about selling gas and that also involves getting getting gas to where it's required >> so given that there's you know obviously some concerns from the domestic gas producers like Beach Energy. Their CEO Brett Wood said that short-term manipulation of the market would lead to a shortfall in the market eventually or if they're driving up the price. Are you concerned at all about the fact that these domestic gas companies are unhappy given they produce like 2/3 to 3/4?

[00:20:00]>> I'm sure there'll be gas companies, as I said, I'm not I'm not being critical of them. They would prefer let it rip, do whatever you like, no government intervention. That's not our approach.

[00:20:10]Our approach is this is Australian gas so Australians should have first go at it. I understand some companies would prefer no regulation.

[00:20:19]>> They're entitled.

[00:20:20]>> They're entit Well, but of course they're going to argue that, right? Of course they would say that, wouldn't they? Right.

[00:20:26]>> But um well, they they'd also just prefer no government involvement in the gas market. That's not our approach because we want to make sure it works on behalf of all Australians.

[00:20:34]>> Yeah. But in the middle, sorry, pardon me. Equally it is unsustainable for a government to continue with this uh I mean it's working well and has produced a lot of stability but it's a patchwork of policies that have been introduced over many years. So uh and this is why the gas industry supported the principle of a gas reservation because they did want to streamline uh what what their market is governed by by getting rid of these other things. So, uh, they may want something in when they say that they support this reservation. Uh, and that's fine. And I know they've told me before and I've certainly told Chris and they'll continue to say that. Uh, but as a government, we have to make decisions on the basis of our analysis of what we think gets us to where Australia needs to be in terms of access to gas and affordability of gas. Uh, and we think this uh is the best plan. Again, we will be going to consultation which will be detailed uh you know starting tomorrow.

[00:21:30]>> So it won't knock out those Oway Basin and Gibson basin producers.

[00:21:34]>> We are going to go to consultation. We we will no doubt hear from beach and sinx and all the others. Uh uh the domestic gas reservation policy in Western Australia has not knocked out uh domestic producers there. So we would expect uh that to be a similar outcome here.

[00:21:48]>> Yeah. Sorry, this gentleman hasn't this this gentleman hasn't had a go yet.

[00:21:51]Following the announcement yesterday, there'll be a government owned 1 billion liter reserve of fuels across Australia.

[00:21:57]I'd like to know uh how much of that storage in the regional areas is already there.

[00:22:02]>> Yeah.

[00:22:02]>> And then will the government become an entity? Yeah. The minimum stockpile publication like alongside BP and the others >> and purchasing for government reserves stuff.

[00:22:14]>> Sure. Uh they're good questions. Uh so we made a very substantial announcement yesterday which had two parts which is what your question goes to. Firstly we're increasing the minimum stock obligation uh on the companies on the entities on all three fuel types. Um uh that's a good thing that's appropriate.

[00:22:29]Uh that will give them time to build it up. But nevertheless um uh that's a good thing. But separately and second and secondly we announced for the first time a government-owned fuel reserve. This is a big change and a good change. We're in the minority in the international energy agency companies without a government-owned strategic fuel reserve.

[00:22:49]It won't make us an MSO entity to your question. It will be separate. It will be separate. There'll be a government own reserve separate to the minimum stock obligation. That's very useful for national strategic purposes. Um it would have been handy for example in the beginning of this international circumstance where I was ringing chief executives of fuel companies and saying there's shortages in regional New South Wales and shortages in the Pilra. They were very responsive and doing their best to get fuel to where it was needed, but they had contracts to meet first legally. If there was a government-owned reserve where we could direct it to a shortage, it would have been very useful. Um, so we are remedying that and creating a government owned reserve, but it's quite separate to MSO. Um, we will build work with industry to build uh any necessary storage and we will look at particular storage in regional areas to your question because that's often where the the shortages might emerge and that's where uh fuel could best be kept.

[00:23:41]But also it needs to but it does need to also feed into the supply chain because you can't just have millions of letters of petrol or diesel sitting there and not be turned over. It's got to be it can't sit there for long. It's got to be used. So we're going to we're going to have to work with industry to develop that and we will.

[00:23:56]>> Last couple of questions. Yeah.

[00:23:58]>> So Minister King, can I come back to the prices? Um you said you've done modeling. Can you just give a a ballpark on what domestic prices could fall down to? 1% 2% you must have got some figures written down somewhere.

[00:24:12]>> I'm sorry to be repetitive but we we have introduced this policy because it will put strong downward pressure on prices. That's our expectation and that's our intent. I'll leave it at that. Yeah.

[00:24:24]>> Have you considered how it will impact smaller gas producers who only produce the domestic?

[00:24:30]>> Yeah, I I think we've answered that question uh already. Uh but of course we speak to all of the the gas producers uh um and no doubt we will we I don't say no doubt we absolutely will speaking to them again as we go through this consultation process uh into the future before this is implemented and starts on the 1st of July of 2027. Uh there are domestic producers in Western Australia that still exist and there is a domestic reservation policy there.

[00:24:55]>> Can I just clarify is it 20% per exporter or across the three?

[00:25:00]>> It's it's 20% of LG production. So of LG exports.

[00:25:05]>> Yeah.

[00:25:05]>> Minister in the context of the energy minister's meeting next week. Um >> tomorrow in fact.

[00:25:10]>> Oh tomorrow uh the data center expectations and how they be implemented are a key focus.

[00:25:17]>> It's understood that additional renewables will have to come online.

[00:25:21]Will there be a threshold the amount of renewables versus the amount of gas that data centers are using? So a little while ago, Minister Assistant Minister Charlton and I put out a paper which um outlined our expectations principles based but nevertheless our strong expectations there'll be additional renewable energy uh and that there'd be redundancy in energies i.e. flexibility so that um they have energy to spare and by additional renewable energy I want to stress that I'm not just using renewable energy that would have been built anyway but using PPAs to bring on new renewable energy. What I'll be discussing with state energy ministers tomorrow and territory energy ministers is how we operationalize that. Assistant Minister Charlton's coming along to uh help us with that discussion. Um we it's not our first discussion energy ministers about data centers. Um but it's important one.

[00:26:07]It's one of the key factors that we'll be discussing tomorrow. We might wrap it up there guys. Thanks for your time.

[00:26:11]Cheers.