The federal government has confirmed it will soften its proposed gas reservation policy, requiring gas producers to reserve “up to” one-fifth of their production for the Australian market rather than imposing a fixed 20% requirement.

The draft legislation is being released after consultation with the gas industry, with Energy Minister Chris Bowen, Industry Minister Tim Ayres and Resources Minister Madeleine King outlining the changes.

The original proposal was designed to ensure more gas remained available for Australian households and businesses, with the government arguing that an oversupply of domestic gas could help put downward pressure on prices.

Bowen said the government still intended to ensure Australian industry had access to gas, but had adjusted the design after receiving feedback on how to achieve the intended domestic oversupply.

“Keep up to 20% of your gas for Australians. So Australian gas should be for Australian use,” Bowen said.

The revised approach means producers will not face a rigid requirement to set aside exactly 20% of production for the domestic market.

Resources Minister Madeleine King said existing contractual obligations would remain unchanged under the scheme.

The government has now pushed the start of the reservation scheme back to July 2028, with Bowen saying the timing is intended to align with companies’ cargo planning.

The government says the policy is intended to provide greater certainty for Australian gas users while supporting domestic supply and industry access to gas. Bowen rejected the suggestion the revised plan represented a backdown, saying several key elements had changed following feedback.

The Resources Minister will also have discretion to reduce a company’s gas reservation obligation, potentially all the way to zero. Bowen said feedback had warned against oversupplying the domestic market to the point where it could become counterproductive. The government says the reservation is intended to put downward pressure on prices, but Bowen said it was not setting a price target or ceiling.

Ayres said the scheme was long overdue, arguing Australia was unusual among major gas-producing economies because domestic producers are not currently required to secure gas for Australian industry and households.

King also said the east coast and west coast would be treated as separate markets under the reservation scheme. She said the regions currently produce gas separately and are not connected by a pipeline, meaning the east coast would not be able to meet its reservation requirements simply by selling gas to the west, or vice versa.

King said the government was not looking to disrupt Western Australia’s existing gas reservation arrangements. She said WA could be released from the federal obligations if its own reservation system was already providing sufficient supply.

The Greens have now called on Labor to abandon the reservation plan and introduce a gas export tax instead.

Greens senator Steph Hodgins-May said the government’s decision to change the requirement from a firm 20% to “up to 20%” showed the policy was being weakened to accommodate gas producers.

The Greens are calling for a 25% gas export tax, arguing it could both influence the amount of gas available domestically and raise revenue for Australians affected by high gas prices.

Hodgins-May said the Greens estimate an export tax could raise at least $17 billion a year. That figure is the Greens’ estimate, rather than a government forecast.

The Greens have previously campaigned for an export tax on gas, arguing that Australians should receive more financial benefit from the country’s gas exports.

The government, meanwhile, maintains that its reservation scheme is designed to increase domestic gas supply and put downward pressure on prices without introducing an export tax.

Source: The Guardian