Will East Coast Gas Prices Fall by 2027? Federal Government Unveils New Reservation Scheme

The Albanese Labor Government has today, May 7, 2026, announced a significant overhaul of Australia’s east coast gas market, introducing a new domestic gas reservation scheme. The policy mandates that gas exporters must set aside the equivalent of 20% of their export volumes for Australian domestic use, a move designed to shore up local supplies and exert downward pressure on prices for households and businesses from July 1, 2027.

This landmark policy shift comes as Australia grapples with the dual challenge of ensuring energy security and insulating consumers from volatile global gas markets. For years, the east coast gas market has been heavily influenced by international LNG prices, leading to periods of high domestic costs.

Details of the New Gas Reservation Scheme

Under the newly announced scheme, the three major Queensland-based gas exporters will be required to demonstrate to the federal resources minister that their domestic supply obligations have been met before securing permits to sell to the overseas spot market.

The 20% mandate falls within the 15%-25% range previously canvassed by the government with industry stakeholders. It will not apply to existing contracts signed before December 22, 2025.

Federal Climate Change and Energy Minister Chris Bowen stated that the legislative requirement is expected to deliver a “modest oversupply” of gas into the east coast market. This anticipated surplus is intended to avert forecast supply shortages and place “downward pressure” on gas prices. Resources Minister Madeleine King further emphasised that the reservation would shield industry and households from global price volatility and ensure Australia’s energy security.

“Our gas market will no longer be hostage to international prices. This 20% domestic reservation will put strong downward pressure on domestic gas prices, shield our industry and households from global price volatility, and ensure Australia’s energy security by avoiding potential gas supply shortfalls.” – Minister for Resources, Madeleine King

This policy represents a significant departure from previous approaches, which saw the domestic market increasingly tied to international LNG prices following the commencement of east coast LNG exports a decade ago. That period saw a tripling of domestic prices and increased exposure to global shocks.

Broader Gas Market Reforms

Accompanying the gas reservation scheme are wider changes to gas market rules, including the removal of the so-called “gas trigger”. This mechanism previously allowed the federal government to force exporters to preserve supplies for domestic use. The government is also resisting calls for a new 25% tax on gas export revenue, with Prime Minister Anthony Albanese ruling out such a tax on existing contracts in the upcoming federal budget.

The government’s interventions aim to provide long-term certainty for both gas consumers and producers, fostering ongoing investment in Australia’s gas industry while prioritising local needs.

Implications for Australian Consumers and Businesses

For east coast households and businesses, this policy signals a potential easing of gas bill pressures from mid-2027. While the immediate impact on current bills remains to be seen, the long-term goal is to decouple Australian domestic gas prices from the extreme volatility of international markets. This could provide welcome relief following several years of elevated energy costs.

The announcement comes at a time when many Australians are already navigating rising energy costs. Earlier this year, the Australian Energy Regulator (AER) released its draft Default Market Offer (DMO) for 2026-27, proposing potential electricity price reductions across New South Wales, South East Queensland, and South Australia, largely driven by lower wholesale electricity costs. Similarly, Victoria’s Essential Services Commission (ESC) has also released its draft Victorian Default Offer (VDO) for 2026-27, indicating average residential bill decreases of around AUD $46 annually. These electricity price adjustments, while positive, do not directly address gas costs.

Consumers looking to manage their energy expenditure should continue to explore all available options. While this gas reservation policy targets future price stability, immediate strategies for reducing energy consumption remain crucial. For advice on managing heating costs, consider our guide on Winter is Coming: How to Slash Your Australian Heating Bills in 2026 as Energy Rebates End. Similarly, understanding your overall electricity usage and exploring market offers is vital, as highlighted in How to Cut Your Electricity Bill This Winter in Australia 2026: Strategies After Federal Rebates End.

The federal government’s move on gas reservation underscores a broader commitment to energy sovereignty and affordability, recognising gas’s ongoing role in the energy transition as a firming fuel for renewables.

What’s Next?

The new domestic gas reservation scheme will commence on July 1, 2027. The government will work with industry on the implementation details over the coming year. This policy, alongside ongoing developments in the electricity market, aims to reshape Australia’s energy landscape towards greater stability and affordability for consumers.