Australia is one of the world’s biggest gas exporters. Labor will now force companies to save some

The reservation will apply to prospective projects, not yet in production, as well as uncontracted gas exports.

Contracts entered into before December last year remain untouched to maintain good trade relations with major investors and buyers of Queensland gas in Malaysia, Japan and South Korea, which are also major suppliers of petrol and diesel to Australia.

Soaring gas prices drove up power bills in 2022, when Russia’s invasion of Ukraine sparked a global energy crunch.

Energy Minister Chris Bowen said the gas reservation would help shield the local market from global shocks and create a “modest oversupply” that would put downward pressure on domestic energy prices.

“This is a carefully calibrated model which ensures that Australia’s national interests are put first,” Bowen said on Thursday.

The policy will apply to the operators of three giant liquefied natural gas export facilities in Queensland, as well as offshore producers in the Northern Territory.

Local gas prices have risen from $4 a gigajoule before 2015, when east coast exports began, to as high as $12 in recent years.

For more than a decade, gas producers have campaigned against a gas reservation on the east coast, singling it out as the most damaging policy proposition for the industry and arguing the local market has always been fully supplied.

The east coast gas reservation will be similar to the Western Australia scheme put in place in 2006. The two sides of the continent do not share gas due to the prohibitive overland distances and lack of shipping import terminals.

The Dutton opposition effectively normalised the policy when it pledged in the 2025 election campaign to impose a reservation.

Since then, the Albanese government has pursued the idea, before Pocock kicked off his export tax campaign, calling for a 25 per cent tax on all gas exports. The export tax was forecast to rake in up to $17 billion a year by forcing multinational gas exporters to pay their “fair share” for the nation’s finite resources.

But Australia has been using its gas exports as collateral in high-level talks with the countries that supply Australia with much of its fuel, such as Japan, Malaysia and South Korea. These nations are also major investors in Australia’s huge gas export industry.

Resources Minister Madeleine King said the east coast reserve was designed to “ensure Australia will remain a trusted and reliable supplier of LNG to our export partners”.

The chief executives of 12 major manufacturers said the reservation was the most significant gas market reform in a generation.

Rising gas bills have increased pressure on the viability of many manufacturers, which rely on the fuel to fire their kilns and furnaces or as a feedstock to make plastics, chemicals and fertiliser.

“Five previous federal governments rejected gas reservation, to the detriment of Australian manufacturing jobs and investment,” said Ben Eade of Manufacturing Australia, a coalition of companies including BlueScope Steel, Brickworks, Tomago Aluminium and Dulux Group.

Explosives manufacturer Orica, one of the nation’s biggest gas users, welcomed the announcement. “While we are yet to see the full detail, we support measures that strengthen Australia’s sovereign manufacturing capability,” Orica chief executive Sanjeev Gandhi said.

The gas lobby criticised the reservation scheme, arguing that it would limit profitability and deter investment in gas projects.

“This announcement risks chilling investment with long-term consequences for Australia’s energy security,” Australian Energy Producers said in a statement.

Domestic gas prices have remained stable as prices have soared overseas since the Iran war began on February 28, and about 20 per cent of global LNG supply was cut off. Australian gas producers have decided to ensure the local market remains fully supplied.

“There is no justification for such heavy-handed intervention when the east coast market is currently well supplied and prices are the lowest they’ve been in years, with Australian gas users insulated from the global energy crisis,” Australian Energy Producers said.

Opposition resources spokeswoman Susan McDonald said the reservation would drive down prices but would deter investment in new projects. “There is a balance to get right so we continue to have investment in this market,” she said.

Greens senator Steph Hodgins-May said the government had released its reservation to distract the public from its decision to shelve the gas tax and to “protect gas corporate profits”.

On Thursday, the Victorian government approved a production permit for Amplitude Energy’s offshore gas project nine kilometres from Port Campbell, which could deliver enough to supply 4 per cent of annual east coast demand over five years. The decision to grant a permit drew immediate objections from environmental campaigners concerned about the project’s risks to the marine environment and its proximity to the Twelve Apostles sanctuary.

Also on Thursday, the Albanese government invited oil and gas companies to bid for exploratory drilling rights across expansive new sections of Commonwealth waters off the coastlines of Victoria and Tasmania.

King said the exploration permits would be offered in the Gippsland Basin and Bass Basin.

“Ongoing investment in the nation’s petroleum sector is vital for the economy and meeting the energy needs of Australians,” King said.

The government’s plans to release swaths of Commonwealth waters for new oil and gas drilling have won support from energy producers and major gas users in the manufacturing sector who say unlocking greater supplies of the fossil fuel is needed to head off shortages and price rises on the eastern seaboard.

But they have angered conservation groups worried about the impact that more gas drilling will have on the marine environment, and those who fear that increasing gas supplies will make it harder to combat climate change. Gas is a key source of carbon dioxide and methane emissions, which contribute to dangerous levels of global warming.

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