Australia to extend domestic gas security mechanism to 2030

The Australian government has proposed an extension of the Australian Domestic Gas Security Mechanism, or ADGSM, until 2030 and may also review the policy aimed at boosting domestic gas supply, according to a statement issued by Minister for Resources and Northern Australia Madeleine King on July 5.

The review of the ADGSM, which was devised by the previous government to ensure domestic gas supply, comes amid growing criticism that Australia exports the majority of its gas production, recent electricity shortages in the eastern states and the election of a new government perceived to be more stringent on climate change mitigation and environmental issues.

The government proposes to extend ADGSM "to ensure the mechanism can be available to help secure ongoing domestic gas supplies to the next decade," King said, adding that while the existing mechanism is an important tool to ensure ongoing security of domestic gas supplies, it "has some clear shortcomings."

The ADGSM, designed to restrict LNG exports and divert volumes to the domestic market, is triggered only in a year when gas demand shortages are forecast in advance. It does not respond to immediate energy shortages.

The current ADSM is set to expire on Jan. 1, 2023 and King had previously announced a separate review of the ADGSM to ensure the mechanism is fit for purpose, the statement said.

The current consultation on the extension of the existing ADGSM to Jan. 1, 2030 is required by law and it will ensure that the government continues to have access to the emergency mechanism to reserve gas for domestic supply in times of a supply shortfall.

"The extension will ensure we continue to have the mechanism available to us while we review how the ADGSM can be improved," King said. She said the current mechanism will take time to produce results and the government intends to make it more efficient.

The government will also renegotiate the Heads of Agreement with east coast LNG producers, and the minister will hold top-level meetings with Australia's major gas suppliers during the consultations, as well as key international counterparts, King said.

"Australia remains a long-term and reliable supplier of resources and energy, and is a crucial supplier of LNG to our trading partners in north Asia. We remain committed to contributing to global energy security and working with international partners to address current global challenges," Minister King said.