China’s LNG Resales Highlight Need to Prioritize Australian Domestic Gas Use

The Queensland government has raised concerns over Australia’s proposed domestic gas reservation policy, which aims to redirect some LNG exports to the domestic market. The government argues that reallocating existing gas supplies is not the solution, emphasizing instead the need for new investment and supply to address forecast shortages. However, analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) suggests that developing new supply may be too slow to resolve the issue, potentially leading to domestic consumers relying on expensive gas from new fields like Narrabri and Beetaloo.

A recent IEEFA report reveals that China has been reselling large volumes of Australian LNG for profit over the past five years. In 2025 alone, China resold an estimated 17-19 million tonnes (Mt) of LNG, much of which was sourced from Australia and other global suppliers. This volume is nearly equal to China’s total LNG imports from Australia in the same year (20.6 Mt). The resales are driven by a mismatch between China’s plateauing LNG demand and its growing contract portfolio, with the contracting surplus expected to reach almost 32Mt in 2026.

China’s resales of Australian LNG, particularly those shipped on Chinese-chartered vessels, highlight the scale of the issue. IEEFA estimates that Chinese companies resold about 1.3Mt of Australian LNG in 2025, earning over USD1.1 billion (AUD1.6 billion) in arbitrage profits between 2021 and mid-2026. Chinese buyers typically pay lower prices for Australian LNG, averaging AUD804 per tonne in 2023 compared to AUD921 per tonne across all export markets.

Japan is another major reseller of Australian LNG, onselling about 44Mt in FY2024, with 30% of trackable resales supplied by Australian LNG. Together, Japan and China represent more than 60% of LNG exports from Queensland and Australia. Given the significant resales by these countries, the case for prioritizing Australian domestic users over LNG exports becomes stronger.