Australia's LNG Export Policy Faces Industry Backlash

Australia has introduced a policy requiring liquefied natural gas (LNG) producers to reserve 20% of their export volume for domestic use. According to Jin10, this policy is expected to apply to all projects and existing contracts, increasing pressure on companies to ensure local supply. The government's draft policy, released on Monday, states that export contracts signed on or before December 22, 2025, will be 'respected,' provided that projects can demonstrate that fulfilling the 20% domestic gas obligation or sourcing alternative gas would not breach these contracts. The proposal has faced strong opposition from the industry, which argues that it will deter investment and harm Australia's reputation as a reliable exporter. This move comes as Australia anticipates a gas supply shortage on the east coast, compounded by the Iran war, which has restricted about one-fifth of global LNG supply, primarily from Qatar, from reaching international markets. The report indicates that companies can meet their obligations by procuring third-party gas, engaging in regional swaps, reducing export deliveries, or sourcing LNG from their global asset portfolios and international markets. The proposal aims to create a 'moderate supply surplus' in the domestic market, allowing regulators to permit the export of excess gas, meaning the actual impact on Australian exports will be significantly less than 20%.