The Australian Government seeks a gas market that:
- benefits all Australians
- strengthens our economy through liquefied natural gas (LNG) exports
- delivers competitive domestic gas prices.
Australian Domestic Gas Security Mechanism
The Australian Domestic Gas Security Mechanism (ADGSM) is in place to ensure there is a sufficient supply of natural gas to meet the forecast needs of energy users within Australia.
If there is a supply shortfall in the domestic market, LNG projects may be required to limit their exports or find new gas sources.
The Minister for Resources is responsible for making the decision as to whether a shortfall market exists. The decision is informed by expert advice from:
- Australian Energy Market Operator (AEMO)
- Australian Competition and Consumer Commission (ACCC)
- industry and other government sources.
Our department provides advice to the Minister on policies and processes relevant to the Act and regulations.
Legal framework, operations and guidelines
The ADGSM sits within Division 6 of the Customs (Prohibited Exports) Regulations 1958. It came into effect on 1 July 2017.
Details about the operation of the ADGSM are in the Customs (Prohibited Exports) (Operation of the Australian Domestic Gas Security Mechanism) Guidelines 2020. New Guidelines came into force on 6 January 2021.
Steps for the Minister to consider in the determination of a domestic shortfall year may include:
- the Minister issues a notification of intent to consider whether to determine a shortfall year
- the Minister may work with industry, government and market bodies about proposed LNG exports and the Australian gas market
- the Minister may make a determination as to whether export controls will apply
- any decision is made public with a statement of reasons
- LNG companies provide feedback
- export permissions may then be finalised.
Restrictions will only apply if the Minister determines a shortfall year.
The ADGSM is designed to allow the Minister to take into account the availability of an industry-led solution which will provide more gas to the domestic market in an identified shortfall year.
Reviewing the Australian Domestic Gas Security Mechanism
The Australian Government is reviewing the ADGSM:
- we consulted on an issues paper on the security of Australia's domestic gas markets in August 2022
- we consulted on an extension of the ADGSM in July 2022.
Agreement with east coast LNG exporters
The government has agreed a Heads of Agreement with east coast LNG gas exporters to safeguard Australia’s domestic supplies.
The Heads of Agreement was negotiated in good-faith between the Minister for Resources and east coast LNG exporters. It is in place until 1 January 2026.
The objective of the agreement is to prevent a gas supply shortfall through access to secure and competitively priced gas for the east coast domestic market.
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