The Albanese Labor Government has moved to establish Australia’s first national Domestic Gas Reservation Scheme, releasing the Domestic Gas Reservation Bill 2026 for public consultation on 10 September 2026. The proposed legislation aims to secure a more affordable and reliable gas supply for Australian households, businesses, and industries by mandating that up to 20 per cent of gas exports be reserved for the domestic market.
The move comes amid ongoing concerns about high domestic gas prices, which have jeopardised industrial users and placed pressure on household budgets. The government asserts this landmark reform will place “significant downwards pressure on price paid by Australian gas consumers” by reducing the risk of price spikes driven by tight market conditions and promoting long-term contracting.
Minister for Climate Change and Energy, Chris Bowen, stated that for too long, Australia has been in a “perverse situation” of being a major gas producer yet facing domestic shortages and price shocks. The new scheme is designed to address this by ensuring the domestic market is “modestly oversupplied,” potentially adding up to 200 petajoules (PJ) of gas per year to the local market – an amount exceeding AEMO’s forecast possible shortfalls of up to 140 PJ.
“The Domestic Gas Reservation Bill 2026 will establish Australia’s first national Domestic Gas Reservation Scheme. This delivers on the Government’s commitment to secure gas supply for Australians and put downward pressure on domestic gas prices, by requiring gas exporters to supply a portion of the gas they produce to the domestic market.”
Key Details of the Proposed Scheme
The draft legislation outlines a framework where gas exporters will be required to offer a portion of their production to the Australian market. While the target is “up to 20 per cent” of LNG exports, the final figure may be adjusted based on a demand calibration process by regulators, infrastructure constraints, or existing state-based reservation arrangements. This specifically acknowledges Western Australia’s long-standing 15 per cent state reservation scheme.
Implementation of the Domestic Supply Obligation (DSO) is slated to commence from 1 January 2028, with the export licence application process beginning on 1 January 2027. This timeline is intended to align with industry contracting cycles, allowing producers to adjust their agreements.
The government’s announcement also highlights the current volatility in gas prices. As of 8 September, the Argus Gladstone fob price, an LNG netback indicator, stood at AUD$32.28 per gigajoule (GJ). For domestic markets, the Argus Wallumbilla (AWX) for October deliveries was AUD$10.55/GJ, while the Argus Victoria (AVX) was AUD$9.25/GJ on 4 September.
Industry Response and Consultation
The upstream lobby group, Australian Energy Producers (AEP), acknowledged that the proposed laws are “better calibrated with domestic market needs” but expressed criticism regarding the planned 110 per cent oversupply of the east coast gas market. AEP warned this could “destroy investment signals” and crowd out smaller, domestic-focused producers, arguing that the “must sell” requirement could force producers to sell gas below cost.
The government is welcoming further feedback to refine the draft legislative package, with submissions closing on 24 September 2026. The bill is then proposed for introduction to parliament later this year.
This development is a significant step in the federal government’s broader strategy to manage energy costs for Australians. While federal bill relief credits concluded at the end of 2025, and no universal replacement has been announced for the 2026-27 financial year, policy interventions like the Domestic Gas Reservation Bill aim to address underlying market dynamics impacting energy affordability. For those looking at broader energy savings, understanding the current Australia’s Energy Bill Relief Landscape in 2026: A Comprehensive Guide to State and Federal Support can provide valuable insights into available support and opportunities.
While gas prices are a key focus, wholesale electricity prices in the National Electricity Market (NEM) saw significant reductions in Q2 2026, falling 47 per cent from the previous year to an average of AUD$74 per megawatt-hour (MWh). This was largely driven by increased renewable output and lower-priced battery generation. This highlights the diverse factors influencing Australia’s energy market and the varying trajectories of different energy commodities.
Impact on Energy Users
| User Type | Potential Impact (Post-2028) |
|---|---|
| Households | Reduced risk of price spikes, more stable gas bills. |
| Small Businesses | Improved long-term contracting opportunities, cost stability. |
| Industrial Users | Enhanced supply security, more competitive input costs. |
The government’s intent is clear: by ensuring a baseline of domestic gas supply, it aims to shield Australian consumers from the full brunt of global commodity market volatility. This policy, combined with ongoing efforts in renewable energy deployment, forms part of a multifaceted approach to securing Australia’s energy future and managing the cost of living. Businesses, in particular, should monitor the progress of this legislation as it could influence their long-term energy procurement strategies. For those with solar and battery systems, participation in schemes like Maximise Your Home Battery Savings: Earn $1,000+ Annually with a VPP in 2026 can offer additional avenues for cost reduction, independent of gas price fluctuations.