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Securing Australian domestic gas supply
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 manufacturers, electricity generators, businesses and households should continue to have access to internationally competitive 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, Water 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, 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.
Operations and processes
The Minister follows the Stepped Process and Timeframes for the ADGSM [548KB PDF].
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.
Review of the Australian Domestic Gas Security Mechanism
We released the ADGSM review in January 2020. Read the review report and recommendations.
Agreement with east coast LNG exporters
The agreement helps to ensure secure and competitively priced gas supply for the east-coast domestic market. It requires east coast LNG exporters to:
- offer uncontracted gas to the domestic market before exporting spot cargoes
- regard the ACCC’s LNG netback price when offering gas domestically
- The Prime Minister and Minister announced the new Heads of Agreement on 21 January 2021.
- The Prime Minister announced that a new agreement would be negotiated as part of the Government’s Gas-Fired Recovery on 15 September 2020.
- AEMO released its Gas Statement of Opportunities in 2020. They reported that under the current production and demand scenario, there will be no near term shortfall in the Australian east coast gas market.
- The ACCC’s interim report of their Gas Inquiry 2017-2020 confirmed there would be sufficient supply in the east coast gas market.
Last updated: 21 January 2021
Content ID: 43371