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 LNG projects’ use of domestic gas results in a supply shortfall in a domestic market, those projects may be required to limit their 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.
The ADGSM sits within Division 6 of the Customs (Prohibited Exports) Regulations 1958.
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.
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 2018
In 2018 the following activity has taken place:
- AEMO released its Gas Statement of Opportunities 2018 which reported that under the current production and demand scenario, there will be no shortfall in the Australian east coast gas market till 2030.
- The ACCC’s latest interim report of their Gas Inquiry 2017-2020 confirmed that there would be sufficient supply in the east coast gas market for 2019.
- The Minister for Resources and Northern Australia, Senator the Hon Matthew Canavan, held roundtable meetings with commercial and industrial gas users in August 2018 and with gas producers in September 2018, to discuss the supply situation in the east coast.
- Export restrictions are not necessary to ensure gas supply security in 2019. A new Heads of Agreement [PDF 171KB] [DOCX 16KB] was made between the Prime Minister and east coast LNG exporters on 28 September 2018 to maintain a secure supply of gas to east coast gas users for 2019 and 2020. This agreement confirms the industry’s commitment to providing uncontracted gas to the east coast domestic market in the event of a shortfall.
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