While most of Queensland’s gas is locked into long-term export deals and sold as LNG to buyers in Asia, APLNG and QCLNG are also key suppliers of east coast domestic gas, together accounting for about 40 per cent of the market. The state’s third LNG exporter, the Santos-backed GLNG business, however, is a net withdrawer of domestic gas to meet its export commitments.
“Requiring all east-coast LNG producers to contribute to the domestic market would materially ease short-term pressures and help maintain reasonable pricing until new sources of Australian gas come online,” APLNG said.
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The threat of local gas shortfalls emerging in south-eastern Australia from 2028 marks a deepening challenge for governments, which are having to balance goals to tackle climate change with the need to shore up supplies of polluting fossil fuels for those who still depend on them.
Households are increasingly switching from gas stoves and heaters to electric alternatives, aided by government incentives and policies banning gas hook-ups in new residences. However, that shift is not happening fast enough to avert the need to boost gas supplies, warns the Australian Energy Market Operator.
Major gas users, including factories that need the fuel to make products such as steel, cement, bricks and fertiliser, have been pleading for the government to clamp down on the LNG sector with export restrictions.
“After being convinced by LNG developers that exports would not adversely impact on domestic users, the last 10 years has seen a progression of government policies playing catch-up as they try to address these adverse impacts,” said the Energy Users Association of Australia, whose members include manufacturing giants such as Brickworks, BlueScope Steel and Incitec Pivot. “None has had an enduring positive impact.”
The Albanese government is undertaking a review of laws and regulations governing the LNG sector to “make sure they are delivering as intended”, and has urged the industry to co-operate and participate in the process constructively.
The Energy Users Association submission said LNG producers’ existing sales contracts should not be interfered with, but domestic commitments should be attached to new export licences once those agreements come up for renewal from 2030.
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Former opposition leader Peter Dutton took a promise to the May federal election to slug LNG exporters with a charge on uncontracted gas supplies that were shipped overseas instead of sold locally. The plan, which would have applied only to APLNG and QCLNG, was staunchly opposed by the industry amid warnings it would stunt investment, and was dismissed by Labor as a “thought bubble”.
Holding back more export gas for local buyers could boost domestic supply, analysts say, but it would not solve the problem of shortfalls in Victoria and NSW on cold winter days when gas demand for heating is particularly high. The north-south gas pipeline is already often running at capacity during winter, and there is insufficient storage capacity in the south to store off-peak gas.
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