Business · Energy & Commodities · 3 hrs ago
Critics say draft gas rules could let Gladstone LNG avoid supply obligations
Australia’s government has proposed requiring gas exporters to reserve up to 20% of their production for local buyers, in an effort to lower prices.
The draft plan covers the east coast gas market, where three major liquefied natural gas plants operate in Queensland.
Critics say Gladstone LNG, operated by Santos on Curtis Island, could avoid much of the requirement because of exemptions and other provisions in the draft.
They point to a possible extension of the plant’s supply deal with South Korea’s KOGAS, which they say could count as an existing contract and be exempt.
Critics also warn that so-called take-or-pay deals could count as domestic sales even when gas is not physically supplied to local buyers.
The draft would let the energy regulator reduce an exporter’s obligation below 20%, and the minister could reduce it to zero.
The government has not yet finalized the plan, and critics say it should require exporters to show they have explored practical ways to obtain gas for local buyers.
The Australian government’s draft gas reservation plan could allow Gladstone LNG to reduce or avoid obligations to supply the domestic market, critics say.
The plan would require gas exporters to reserve up to 20 per cent of production for Australian buyers.
Critics say exemptions and other provisions could let GLNG count contract extensions as existing contracts or use paper sales without supplying gas.
GLNG is operated by Santos and has a 7.8-million-tonne-a-year capacity on Curtis Island in Queensland.
The draft is intended to protect local buyers and put downward pressure on prices.
- Who
- Critics, including Australian Workers Union national secretary Paul Farrow, say the draft could benefit Santos-operated GLNG.
- What
- Critics warn that provisions in a draft gas reservation plan could let GLNG reduce or avoid domestic supply obligations.
- When
- The draft plan was released last month, according to the ABC report published on October 11, 2026.
- Where
- Gladstone LNG is on Curtis Island in Queensland, Australia.
- Why
- The government says the plan is intended to protect domestic buyers and force prices lower; critics say loopholes could undermine it.
Critics of the draft
Australian government
Purpose
Critics of the draft
The draft could weaken the reservation plan through exemptions and other loopholes.
Australian government
The plan is intended to protect local buyers and force prices lower.
GLNG’s obligations
Critics of the draft
GLNG should have to explore practical ways to obtain gas for the domestic market, critics say.
Australian government
The draft allows the Australian Energy Regulator to reduce an exporter’s obligation below 20 per cent and the minister to cut it to zero.
Santos-sized loopholes threaten to turn the government's reservation plans into a joke.
Australian industry and Australian consumers deserve to derive an advantage from Australia's gas because it's our sovereign wealth
The government is so close to getting it right.
That's a major, major worry.
The Australian government released a draft plan to require exporters to reserve up to 20 per cent of production for the domestic market.
GLNG could extend its supply agreement with South Korea’s KOGAS for five years from this year, under a provision critics say treats extensions as existing contracts.
- Draft reservation target
- Up to 20 per cent of exporters’ production
- GLNG capacity
- 7.8 million tonnes of LNG a year
- GLNG operator
- Santos
- GLNG location
- Curtis Island, Queensland
- KOGAS supply agreement
- 3.5 million tonnes of LNG a year; critics say this is equivalent to about 40 per cent of annual east coast gas demand
Sources
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