Draft gas reservation plan criticised for loopholes that could favour Santos’ Gladstone LNG
Industry groups say the government's draft gas reservation scheme contains loopholes that would let the Santos-led GLNG project largely avoid the 20% domestic supply rule.
The federal government released a draft gas reservation framework that would compel exporters to allocate as much as 20% of their production to the domestic market, aiming to curb high east-coast gas prices. Industry analysts and the Australian Workers Union contend the draft contains numerous loopholes, such as allowing the Australian Energy Regulator to lower the mandatory share and giving the minister power to set it to zero.
Specific clauses would let Santos-controlled GLNG treat contract extensions and take-or-pay arrangements as exempt, potentially enabling the Gladstone LNG plant to sidestep the reservation entirely. Critics point to GLNG’s past export of an amount equal to 20% of eastern Australia’s domestic demand over a decade, while other Queensland projects have largely supplied locally. The draft also introduces an “additional gas” test that could be gamed, and does not carry forward reductions to future years.
China’s embassy submitted concerns, asking that the legislation apply uniformly to all LNG exporters and protect foreign investors. The government is expected to move the draft to legislation in the coming weeks.
Why it matters
The decision will shape whether Australian households benefit from lower gas prices or if major exporters keep most of their output overseas.
In this story
