The Australian natural gas industry is resisting proposed rules that would give the government more power to limit exports in the event of a domestic shortage.
The opposition comes after the government proposed reviews to strengthen Australia’s Domestic Gas Security Mechanism, a measure of last resort that restricts some LNG exports to ensure there is enough fuel available for domestic use.
The government had asked for comment on the proposed changes last month, aiming to implement the new system by April 1.
“The government must prioritize increasing domestic gas supplies, rather than compromising international contracts, investments and partnerships,” the Australian Association of Petroleum Production and Exploration said in comments submitted to the government last month. “Intervention in the gas market jeopardizes Australia’s reputation as a stable and reliable energy trading partner,” she added.
The proposal from Australia – one of the world’s largest exporters of liquefied natural gas – is designed to protect consumers from energy shortages at home as Russia’s war in Ukraine threatens to keep global markets tight. Companies, including energy giant Shell, fear that any intervention would lead to the cancellation of deliveries to Asian customers, who have invested billions of dollars in export infrastructure and signed binding contracts to buy fuel.
However, the government has stressed that long-term contracts – under which most of the gas is sold – will not be affected, as the proposed draft mechanism also includes rules to protect this matter.