The LNG supply trigger will be reviewed earlier to secure domestic gas supplies

Queensland’s three big liquefied natural gas exporters face a major government clampdown to ease pressures on the domestic gas market.

Exports of LNG will come under the control of a quarterly gas trigger review. Picture: Glenn Campbell

Queensland’s three LNG exporters face a major clampdown to ease pressures on the local gas market with the Albanese government to introduce a quarterly gas trigger review in a bid to ­protect domestic supply and stem industrial job losses.

The three LNG plants – owned by Santos, Shell and Origin Energy – are currently controlled by the Australian Domestic Gas Security Mechanism, which gives the government power to halt LNG exports if a domestic shortfall year has been declared.

However, since coming to power Labor has criticised the ADGSM – or gas trigger – as a clunky measure that takes too long to ­implement because the government must make its shortfall declaration before November the following calendar year.

Resources Minister Madeleine King will now receive expert advice every three months – rather than annually – and will be able to start the process of activating the mechanism if she concludes a risk of domestic gas supply shortages is expected.

Federal resources minister Madeleine King Minister. Picture: Gary Ramage

It was among measures announced in the budget with Treasury allocating the Australian Competition and Consumer Commission $40m for the increased oversight of gas markets.

Treasury also flagged it was “exploring options for further ­reforms that may be required to ensure Australian customers have access to energy at reasonable prices”, amid persistent speculation a price reform could be introduced to ease pressures on high tariffs for manufacturers.

The move, which will involve consultation with the LNG producers – represents a fresh threat to the industry just weeks after it struck a heads of agreement with the Albanese government amid the threat of the gas trigger being pulled for the first time.

Under the agreement in late September, exporters agreed to provide an extra 157 petajoules of gas for the domestic market next year and charge domestic users no higher than international ­customers for supplies.

That followed the competition regulator warning of a domestic gas shortfall on Australia’s east coast in 2023, which sparked alarm after a winter where price caps were introduced in several states and supplies limited in Victoria amid depleted storage levels.

The gas industry is already on edge as Labor moves to revamp the gas industry’s code of conduct to cut prices, while unions say the government has not done enough to bring energy costs down for manufacturers.

A worker at the Curtis Island liquefied natural gas plant in Queensland. Picture: Bloomberg

Manufacturing firms are being offered gas contracts of up to $35 a gigajoule – more than triple levels from a year ago – with the Australian Industry Group warning the surge could lead to job losses, deferred investment and possible manufacturing plant closures.

Ms King has previously conceded domestic gas prices would not return to pre-Ukraine war levels of less than $10GJ.

Gas producers are also grappling with a new proposal from energy ministers to allow the Australian Energy Market Operator to trade in gas and potentially intervene in the market to avoid a supply crisis next winter.

Some energy players, including the industry body APPEA, fear a new interventionist regimen will hike risks and question what it would mean for existing gas contracts in the sector.

Analysis from the ACCC and AEMO has already forecast potential supply shortfalls next year. The competition regulator said in July that the east coast gas market could be facing a 56PJ shortfall in 2023 – about 10 per cent of demand – unless more gas from Queensland producers is supplied into the domestic market.

Labor also said it would ­provide $141m for carbon capture to help hit net zero goals as part of a “realignment” of spending for the technology.

The government said it had saved $325m from the partial ­reversal of energy and emissions reduction measures from the ­Coalition’s pre-election budget in March.

That includes reversing uncommitted funding from unannounced, yet-to-be-initiated programs and not proceeding with gas or carbon capture and storage pipeline investments found to lack a case for government support.

Originally published as The LNG supply trigger will be reviewed earlier to secure domestic gas supplies