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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 drawing gas from a domestic shortfall market results in an insufficient gas supply, LNG projects may be required to limit exports or find new gas sources.

The Minister for Resources and Northern Australia 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

The ADGSM sits within Division 6 of the Customs (Prohibited Exports) Regulations 1958. This was amended by the Customs (Prohibited Exports) Amendment (Liquefied Natural Gas) Regulations 2017.

Details about the operation of the ADGSM are in the Customs (Prohibited Exports) (Operation of the Australian Domestic Gas Security Mechanism) Guidelines 2017.

The ADGSM came into effect on 1 July 2017.

Operations and processes

The Minister follows the Stepped Process and Timeframes for the ADGSM [548KB PDF].

Steps may include:

  • the Minister issues a notification of intent to consider whether to determine a shortfall year
  • the Minister seeks industry and government stakeholder views 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.

Industry-led solution

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.

Activity in 2017

Since the ADGSM came into effect, the following activity has taken place:

  • The Minister issued a notification of intent to consider whether to determine 2018 as a domestic shortfall year on 24 July 2017. This was in accordance with the Regulations.
  • The Minister sought the views of gas producers, LNG exporters and other stakeholders including AEMO, ACCC and major gas users.
  • AEMO issued the Update to Gas Statement of Opportunities in late September 2017. This assessment forecast a shortfall in gas supply to meet domestic demand for calendar years 2018 and 2019.
  • The Prime Minister of Australia and LNG exporters signed the Heads of Agreement: The Australian East Coast Domestic Gas Supply Commitment [854KB PDF] on 3 October 2017. An industry-led solution is in place for east coast LNG exporters to maintain a secure and affordable domestic gas supply for 2018 and 2019.

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Last updated: 14 August 2018

Content ID: 43371