Resources and Northern Australia Minister Madeleine King has opened consultations on ways to improve the operations of the Australian Domestic Gas Security Mechanism (ADGSM) to strengthen Australia’s domestic energy supply, and released a discussion paper on the reform options.

Minister King has also announced the start of consultations with gas producers on a new Heads of Agreement with the Government, which will further ensure Australia will have adequate gas supplies over coming years.

The ADGSM is a complex measure of last resort which allows the Government, in the event of a predicted shortfall, to restrict exports to ensure enough gas is available for domestic use.

Minister King said options to reform the ADGSM will be based on seven key principles, to:

• ensure sufficient supply of gas to the domestic market to support manufacturing and energy security;
• put downward pressure on domestic gas prices;
• maintain Australia’s position as a leading contributor to global energy security;
• respect the trust trading partners and international investors have shown in Australia’s resources and energy sectors;
• support the energy transition in line with Australia’s emissions reduction targets;
• enhance transparency and processes that support competitive pricing outcomes for gas consumers; and
• minimise implementation costs and complexity for government and industry. 

“This reform process will give Australia the opportunity to move to a solutions-focussed debate about our energy future,” Minister King said.

“A strengthened ADGSM will work alongside the new Heads of Agreement, and ensure the Government can respond quickly to short-term issues rather than only respond to forecast shortfalls a year in advance.

“The reforms announced today are intended to work hand-in-hand with energy market reforms being considered by Energy Ministers.”

Gas is a crucial and flexible source of energy which can generate electricity at short notice. It accounts for around 40 per cent of energy consumption in manufacturing, and is a crucial source of energy to back up electricity generation.

Gas accounts for around 7 per cent of electricity generation in the National Electricity Market, with coal accounting for 65 per cent and with around 28 per cent from hydro, wind and solar.

The decisions to review and reform the ADGSM and to renegotiate the Heads of Agreement were announced by Government on 9 June 2022.

The discussion paper, and information on how to make a submission, are available on the Department of Industry, Science and Resources ADGSM reform web page.