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Labor moves to keep more Australian gas at home

Labor softened the bill after industry pressure, with domestic supply obligations due to begin in January 2028 if parliament passes it.

3 min read
Resources Minister Madeleine King speaks at the National Press Club in Canberra
Resources Minister Madeleine King at the National Press Club in Canberra. Digitally illustrated image.
By Bushletter Newsroom ·

TLDR

Australia's first national gas reservation law, introduced to parliament on 14 October 2026, requires LNG exporters to set aside up to 20 per cent of export volumes for domestic supply. Licence applications open on 1 January 2027 and supply obligations begin a year later, with the Australian Energy Regulator calibrating the annual target to 110 per cent of projected domestic demand.

Bill introduced in parliament

Resources Minister Madeleine King introduced the Domestic Gas Reservation Bill to parliament on 14 October 2026, establishing Australia's first national framework requiring LNG exporters to reserve gas for domestic use.[1] She defended it in a speech to the National Press Club in Canberra the same day.

The scheme mandates reserving up to 20 per cent of export volumes for the domestic market, with the Australian Energy Regulator varying the obligation each year targeting 110 per cent of projected domestic demand.[1] The licence application process opens on 1 January 2027, and the domestic supply obligation starts on 1 January 2028.[1]

What changed from the September draft

King said the final bill differs from the September 2026 exposure draft in several respects, incorporating limited ministerial discretion, tighter anti-gaming rules and mandatory consultation with states and territories before obligations are set.[1]

The bill abolishes the Australian Domestic Gas Security Mechanism, and the Heads of Agreement with east coast exporters falls away as a consequence.[1] King said the mechanism would no longer be needed in a well-supplied market.

Industry and crossbench reaction

Australian Energy Producers chief executive Samantha McCulloch warned in May, when the draft framework was released: "At a time when Australia needs more gas supply, this proposal risks crowding out smaller domestic producers, discouraging future projects and exacerbating long-term supply pressures in the east coast gas market."[2]

The Greens have called for a minimum 25 per cent gas export tax in place of the reservation scheme, arguing it would raise $17 billion a year for cost-of-living relief.[3]

The bill must pass both houses of parliament before licence applications open on 1 January 2027.[1]

KEY TAKEAWAYS

01Up to 20 per cent of LNG export volumes must be reserved for domestic supply under the bill.
02Licence applications open on 1 January 2027, with supply obligations starting 1 January 2028.
03The bill abolishes the Domestic Gas Security Mechanism, and the Heads of Agreement falls away.
04Australian Energy Producers chief Samantha McCulloch warned the scheme risks crowding out smaller producers.
05The Greens are pushing a 25 per cent export tax instead, claiming it would raise $17 billion a year.

FREQUENTLY ASKED QUESTIONS

What does the Domestic Gas Reservation Bill require?
It requires LNG exporters to reserve up to 20 per cent of their export volumes for domestic use, with the Australian Energy Regulator setting annual obligations targeting 110 per cent of projected domestic demand.
When do the obligations take effect?
Licence applications open on 1 January 2027. The domestic supply obligations themselves begin from 1 January 2028.
What happens to the existing Domestic Gas Security Mechanism?
The bill abolishes the Australian Domestic Gas Security Mechanism, and the Heads of Agreement falls away as a consequence.
What is the Greens' alternative?
The Greens are calling for a minimum 25 per cent tax on gas exports instead of the reservation scheme, saying it would raise $17 billion a year.
Related topics
Business Energy Australia Madeleine King
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