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Consultations start on the Australian Domestic Gas Security Mechanism

24 July 2017

The Minister for Resources and Northern Australia, Senator Matt Canavan, has today given formal notice to liquefied natural gas (LNG) producers that he intends to consider whether 2018 will be a gas shortfall year under the Australian Domestic Gas Security Mechanism (ADGSM).

The new ADGSM, introduced on July 1, allows the Government to intervene, if necessary, to ensure there is a sufficient supply of natural gas to meet the forecast needs of Australian consumers.  It will do this by requiring LNG projects which are drawing gas from the domestic market to limit exports or find offsetting sources of new gas.

“The Australian Government is focussed on ensuring domestic gas users have access to a sufficient supply of gas at a reasonable price,” Minister Canavan said.

“Under this first step of the ADGSM I will be consulting with the Australian Energy Market Operator, the ACCC and major gas producers and users.

“The mechanism enables the Australian Government to take action to secure domestic gas supply because of its importance to the Australian economy, at the same time bearing in mind the gas export industry’s long-term viability.

“The ADGSM is a mechanism of last resort to be applied in accordance with our international trade obligations and will only be used if there will not be a sufficient supply of gas for Australian consumers. The mechanism will balance domestic gas market considerations with the operational and planning requirements of a globally integrated and highly competitive export industry.”

Minister Canavan said Australia was not the only economy that operated some form of export permission.

“Our longer term goal is to increase domestic gas supplies and improve the transparency and efficiency of the gas market supply chain.

“I am committed to working closely with the gas supply industry and domestic gas users to address potential gas shortfalls through a non-regulatory approach as part of the ADGSM consultation process.

“In addition to the ADGSM, the Government will spend over $90 million to bring on new gas supplies and promote gas market reform.

“We are working with States and Territories that want to develop their own gas resources through the new $26 million Gas Acceleration Program (GAP) to fast track new gas to the east coast market.”

Media contact: Minister Canavan's office 02 6277 7180