Domestic Gas Reservation (Consequential Amendments) Bill 2026
Ms MADELEINE KING (Brand—Minister for Resources and Minister for Northern Australia) (09:13): I move: That this bill be now read a second time. Together, the three bills of the domestic gas reservation package establish a nationally consistent domestic gas reservation framework. Australia's gas supports households, manufacturers, regional communities and our international trading relationships.
Australians rightly expect our resources to serve the national interest, including by supporting reliable domestic supply. This bill makes the supporting amendments required for that framework to operate through existing gas market institutions and for an orderly transition from current arrangements. This bill has three principal elements.
It amends the Competition and Consumer Act 2010, amends the Gas Market Code, and repeals the Australian Domestic Gas Security Mechanism in the Customs (Prohibited Exports) Regulations 1958. Amendments to the Competition and Consumer Act 2010 and the Gas Market Code establish an additional gas framework to ensure an exporter's domestic supply obligation makes a genuine contribution to domestic supply, rather than being met by reallocating gas already available to Australian users.
Gas produced above a baseline set by the Australian Energy Regulator will qualify as additional gas. The regulator may also approve other gas as additional on application, if prescribed circumstances are met. This is an important integrity safeguard.
It helps prevent exporters from satisfying their obligations by purchasing or redirecting gas that would otherwise have remained available to domestic buyers. The Gas Market Code amendments also prescribe carefully defined flexibility mechanisms. The core principle is that licence holders must supply, not merely offer, gas to the market.
A licence holder must supply at least 90 per cent of its domestic supply obligation in the relevant period. For the remaining portion, up to 10 per cent in total, the licence holder may meet flexibility requirements where qualifying gas has been genuinely offered to domestic buyers on domestically competitive terms but is not purchased, where a contractual call option is not exercised, or where exceptional and unforeseeable circumstances outside the supplier's control prevent delivery.
Any resulting deferred quantity must subsequently be offset. This will balance the obligation to supply with bounded flexibility to ensure the scheme is workable in practice, recognising that markets and demand are dynamic. A regulatory framework which allows the market to operate is in the interests of all participants.
The Gas Market Code amendments support a demand-responsive scheme. The regulator's methodology for determining the demand calibrated quantity must consider forecast aggregate demand, the target level of supply and forecast supply from sources other than licence holders. It must draw on the relevant Australian Energy Market Operator gas outlook for the domestic market.
The regulator will also provide licence holders with forward estimates of a licence holders' demand calibrated quantity for the next four years and must publish demand-calibration determinations and estimates. This will improve transparency and give industry greater visibility of future requirements. The bill modernises and simplifies the existing gas expression-of-interest framework and streamlines the information required.
It removes the prescriptive initial-offer and final-offer stages and repeals the $12 per gigajoule pricing cap and conditional ministerial exemptions, which were introduced in response to an energy crisis in 2022. 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 of 2022.
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.
The bill strengthens market conduct requirements. Suppliers must report expressions of interest to the Australian Energy Market Operator, keep these expressions of interest current, and retain relevant negotiation records. Good-faith requirements will expressly consider whether a licence holder has unreasonably refused an offer and whether proposed terms were fair and reasonable.
Experience has demonstrated that only requiring the offer of gas has not worked in the interests of gas users. Stronger conduct requirements reinforce that merely 'offering' gas to the Australian market is not enough: the reservation requires real gas, not paper compliance. The amendments are designed to shift the balance of bargaining power to help make sure Australian users can get a better deal.
The bill also supports an orderly transition from the Australian Domestic Gas Security Mechanism and heads of agreement. The ADGSM and HOA have played important roles for responding to potential shortfalls, however it placed significant burden on the three Curtis Island exporters, including by requiring regular reporting to the Australian Competition and Consumer Commission and meetings with ministers.
From 1 January 2028, it will be replaced with a regulatory model that is intended as an enduring legislative solution. The amendments have staged commencement. The Gas Market Code amendments concerning additionality and demand calibration, as well as other amendments supporting the principal bill commence with that bill.
The remaining Gas Market Code amendments commence on 1 July 2027, and repeal of the ADGSM commences on 1 January 2028. Transitional arrangements preserve the ADGSM for domestic shortfall quarters ending before that date, avoiding gaps or unnecessary overlap. The bill ensures that the new domestic gas reservation scheme works coherently with existing gas market legislation and delivers a practical transition to the new national framework.
Debate adjourned.