Australia Softens Gas Reserve Rule for Exporters
Australia has softened its proposed rule for energy exporters to reserve a fixed 20% of natural gas, opting instead for a more flexible approach that requires exporters to reserve up to a fifth of production as determined by the country's energy regulator.
The new policy aims to ensure that domestic markets are modestly oversupplied and that gas is more affordable. According to Energy Minister Chris Bowen, this will provide an oversupply of 110% for the east coast gas market, which has faced shortfalls for almost a decade.
The proposal also recognises regional differences, with a domestic reservation requirement of 15% in Western Australia and largely exempting the Northern Territory. The changes come after the centre-left Labor government proposed a hard 20% gas reservation scheme in May, but have since softened their stance following feedback from industry stakeholders.
The new policy is expected to affect three liquefied natural gas (LNG) export projects on the east coast operated by Origin Energy, Shell and Santos. Shares in Santos and Origin Energy were slightly higher in early morning trade, but the Australian Energy Producers group warned that oversupply could flood local markets, drive down prices, and discourage development of new gas supply.