Full Breakdown
Australia’s National Gas Reservation Scheme Aims to Stabilise Prices
By Drooid · · How we work
Core Event: Introduction of the national gas reservation scheme
The Albanese government has tabled legislation that would require gas producers to set aside 20 % of their export volumes for domestic consumption and to meet a target of 110 % of projected Australian demand each year. The Australian Energy Regulator would enforce the target and could compel producers to supply the shortfall. The scheme replaces the Turnbull-era domestic gas security mechanism and is slated to commence in January 2028.
Background & Context
Gas remains essential for heating homes, powering manufacturing, processing critical minerals and supporting the rollout of renewable energy. After Russia’s 2022 invasion of Ukraine, wholesale gas prices in Australia surged from an average of under $10 per gigajoule (GJ) to about $60 per GJ, prompting temporary caps of $12 per GJ that were later deemed insufficient. The new reservation scheme is presented as a longer-term fix.
Official Statements & Responses
She added that the government has no plans to introduce a gas export tax, arguing that such a tax would raise rather than lower domestic prices.
The Australian Energy Regulator is tasked with setting the annual volume that producers must supply domestically, calibrated to the 110 % demand target.
Industry body Australian Energy Producers warned that forcing sales below the marginal cost of new supply—estimated at $9.50-$13 per GJ—could make future projects uneconomic. Its chief executive Samantha McCulloch said the scheme might deliver a temporary “sugar hit” but could ultimately dry up supply.
Data & Statistics
- Reservation level: 20 % of gas exports.
- Demand target: 110 % of projected domestic demand.
- Historical wholesale price range: $10-$11.50 per GJ (pre-2022).
- Price spike after Ukraine invasion: up to $60 per GJ.
- Marginal cost of new supply: $9.50-$13 per GJ (industry estimate).
Criticism & Opposition
- Andrew Hastie, shadow industry minister, criticised the “very short consultation period” and called for more drilling and investment rather than price controls.
- Australian Energy Producers (led by Samantha McCulloch) argued the scheme could force sales at prices below production cost, undermining investment and long-term supply.
Conflicting Reports & Gaps
The government asserts that the reservation will create downward pressure on consumer prices, yet it has not disclosed any modelling or specific price-reduction figures, citing commercial sensitivity. Industry analysts contend any price benefit may be short-lived and could be offset by reduced investment, highlighting a lack of independent impact assessment.
Verbatim Quotes
- “Taxing the gas industry doesn’t make gas cheaper; it only serves to make it more expensive,” — Madeleine King, resources minister
- “We have done a lot of study and a lot of analysis and, I might add, that so has just about everybody else in relation to this,” — Ms King, resources minister
- “Our focus is on making sure there is this modest oversupply, and that demand calibration is really important, as well, in this,” — Ms King, resources minister
What’s Next
The legislation was tabled on September 10 and will undergo parliamentary debate. If passed, the scheme will become operational in January 2028. The minister indicated an impact assessment will be released, but no timeline for its publication was provided.