Analysts and major energy consumers have raised concerns that the federal government's proposed gas reservation scheme may still allow key exporters to avoid their obligations. The Albanese government's plan, currently under debate in parliament, aims to require gas exporters to set aside up to 20% of their production for the domestic market. However, critics argue that significant loopholes remain, particularly for the Gladstone LNG venture led by Santos, which has been accused of driving up domestic gas prices by buying large amounts of gas for export.
Paul Farrow of the Australian Workers Union warned that the legislation could permit Santos to meet its obligations through 'paper' supplies, such as acquiring local gas projects, rather than contributing new gas. He also highlighted that ministers would have broad discretion to adjust exporters' obligations, with limited recourse for review. Saul Kavonic, an analyst at MST Financial, echoed these concerns, stating that the policy's effectiveness hinges on opaque baseline assessments susceptible to lobbying.
Andrew Richards of the Energy Users Association praised the intent of the proposed laws but cautioned against creating ambiguity that could be exploited. He noted that gas prices in eastern Australia dropped from $13 to $8.50 per gigajoule this year after Santos reduced its purchases from the local market, demonstrating the potential impact of the reservation policy. Meanwhile, the Australian Energy Producers lobby argued that the scheme could harm new gas projects and lead to lower supplies and higher prices.
Kavonic and others warned that the current draft could inadvertently concentrate domestic market power in the hands of exporters, undermining the policy's goals. Despite some improvements in recent revisions, the legislation still faces criticism for being overly complex and vulnerable to manipulation.