Domestic Gas Reservation Bill 2026
Ms MADELEINE KING (Brand—Minister for Resources and Minister for Northern Australia) (09:02): I move: That this bill be now read a second time. Australia's gas is a national asset. Together, the three bills of the domestic gas reservation package establish a nationally consistent domestic gas reservation framework.
Australian gas supports jobs, investment, regional communities, export earnings, and provides energy security for our trading partners. Gas powers Australian homes, underpins Australian manufacturing and industrial activity, and contributes to the reliability of our energy system. Australians expect our resources to serve the national interest.
Australians expect a reliable supply of affordable gas at home—and that's what a domestic gas reservation scheme delivers. It is important to recall how we got to this point. When we were first elected to government in 2022, the first thing we had to deal with was an energy crisis.
A decade of chaotic policymaking from the coalition, combined with weather events, coal power station maintenance backlogs from COVID, and the consequences for global gas supply due to Russia's illegal invasion of Ukraine, saw energy prices spike severely that winter. In some cases, gas was offered into the Australian market for well over $60 a gigajoule. This was clearly unacceptable and demonstrated that the regulatory framework we inherited to manage our gas market was weak and ineffective.
The Gas Market Review concluded that fundamental reform of Australia's gas market was essential and recommended establishing a national gas reservation scheme. Extensive consultation has been undertaken since the release of the Gas Market Review in 2025 and has been critical to developing a package that establishes a nationally consistent domestic gas reservation framework.
Gas producers, exporters, peak bodies, manufacturers, unions, state and territory governments and trade partners have been engaged through formal consultation processes, bilateral engagement, and webinars. An exposure draft of the package was open for comment from 10 to 24 September 2026. Over 25 bilateral meetings were held and around 130 submissions received.
Public submissions have been published on the Department of Industry, Science and Resources' website. At the heart of this reform is a simple proposition: exporters that benefit from Australia's gas resources should make an appropriate contribution to the domestic markets connected to those resources. Under the framework, exporters of liquefied natural gas will be required to hold an export licence and meet a 'domestic supply obligation'.
This will require LNG exporters to contribute up to the equivalent of 20 per cent of their exports to domestic gas markets. This obligation can be calibrated to domestic demand and market conditions. The scheme also permits adjustment of a domestic supply obligation to recognise existing export contracts, existing reservation arrangements or existing infrastructure constraints.
The framework does not limit the amount of LNG that may be exported. It instead establishes a predictable and proportionate domestic contribution while allowing exporters to continue participating in international markets. Those contributions are in the form of gas sold to domestic customers, at prices agreed in commercial negotiations between buyers and sellers.
Australia will remain a reliable energy trading partner, now and in the future. The government recognises that the LNG sector operates through complex and long-term commercial arrangements. The bill provides flexible compliance options, including renewable gas supply, and demand reductions.
The bill also includes targeted adjustment mechanisms for existing export contracts entered into on or before 22 December 2025. This reflects Australia's commitment to honouring established commercial arrangement. The bill also includes mechanisms to adjust the amount or timing of obligations to recognise existing infrastructure constraints and existing domestic gas reservation arrangements.
These provisions balance legitimate commercial or technical constraints while maintaining the central objective of increasing gas available to Australian users. Australia has two distinct domestic gas markets: the east coast gas market, which includes the Northern Territory, and the west coast gas market in Western Australia. They comprise separate networks of interconnected gas pipelines.
Conditions in one market therefore do not necessarily reflect conditions in the other. The bill recognises this physical separation and provides scope for obligations to be calibrated to the supply and demand conditions of each market, based on the circumstances at the time. An exporter's domestic supply obligation will be directed to the domestic market which is physically connected to the export, ensuring that each exporter's contribution supports that domestic gas market.
Demand calibration will ensure obligations remain connected to forecast requirements in a domestic gas market. The Australian Energy Regulator must determine a demand-calibrated quantity for a licence holder unless exceptions apply, taking account of forecast domestic demand, forecast supply and an appropriate 10 per cent supply buffer. Licence holders may meet their obligation flexibly while remaining accountable for the required domestic contribution.
They may supply at least 90 per cent of the minimum quantity during a regulated period and, where prescribed requirements are met, defer the remaining portion. Any deferred quantity must be offset through increased domestic supplies over the following three regulated periods. A regulated period is a calendar year.
The bill also protects the integrity of the scheme. Qualifying supplies will need to be the licence holder's own gas or additional gas. If a licence holder acquires, and exports, non-additional gas from the domestic market, that quantity is added to its obligation.
Anti-avoidance provisions will deter arrangements designed to circumvent key obligations of the scheme. The bill takes a technology-neutral approach to infrastructure, to support the use of both traditional natural gas and future low-emission gases. This provides more options for cost-effective compliance and enhances the pathway to recognise lower-emissions alternatives while preserving domestic supply outcomes and energy security.
Export licences will generally run for a 20 to 50 years, providing long-term regulatory certainty for exporters. Before granting a licence, the minister must be satisfied that the applicant is fit and proper to hold the licence and the applicant intends and is capable of being an exporter of liquified natural gas. A licence may be renewed, and a licence holder that no longer intends to export may seek the minister's consent to surrender its licence.
The Australian Energy Regulator will administer and enforce the scheme. Licence holders will be required to prepare compliance plans, report annually on their activities and maintain financial assurance. Monitoring, information-gathering and audit powers will support early identification of compliance risks.
A proportionate enforcement framework will include directions, civil penalties, enforceable undertakings and injunctions, supported by liabilities for executive officer. Transparency, publication and review arrangements will provide appropriate accountability. The framework also regulates changes in control and allows licences to be suspended or cancelled where serious noncompliance occurs.
The framework will be introduced through an orderly transition. The principal legislation and licensing framework are intended to commence by proclamation. A backstop commencement date of 1 July 2027 has been included in the bill to ensure certainty for industry.
This approach offers an appropriate balance between providing surety for stakeholders and sufficient time to finalise the supporting arrangements needed for implementation. The export licensing requirement and domestic supply obligations will operate from 1 January 2028, giving industry and the regulator time to prepare. This bill makes reliable domestic natural gas supply a normal and predictable part of LNG export activity.
The related Domestic Gas Reservation (Consequential Amendments) Bill integrates the framework with the Gas Market Code and transitions from the Australian Domestic Gas Security Mechanism. The Domestic Gas Reservation Levy Bill provides for recovery of the costs incurred in administering and regulating the scheme. Together, the package will deliver a streamlined, fit-for-purpose framework that strengthens Australia's energy security and improves the predictability of domestic supply in the long-term interests of Australian households and businesses, while providing greater regulatory certainty and maintaining Australia's position as a reliable LNG exporter and trading partner.
Debate adjourned.