Producers of liquefied natural gas (LNG) on Australia’s east coast will have to set aside 20% of their gas exports to be sold to domestic users from July next year.

The long-awaited gas reservation plan, unveiled on Thursday, is well overdue. But it will not come into effect until July 2027, six months after it was originally supposed to start.

The policy is expected to lead to a “modest” oversupply in domestic gas in eastern Australia. Gas exporters in Western Australia have had to set aside 15% since 2006, though compliance is poor.

The change is intended to head off looming gas shortages in New South Wales and Victoria, as supplies from traditional sources such as the Gippsland basin off the coast of Victoria dry up from 2030.

The extra supply to the domestic market could lower prices and help industries such as manufacturing and chemical plants, which have been battered by high gas prices over the past decade.

Why do we need to reserve gas?

Gas user groups have called for reservation to be put in place ever since eastern Australia became a gas exporter in 2015. Since 2010, three liquefied natural gas (LNG) plants have been built at Queensland’s port of Gladstone to ship gas to customers in countries such as China, South Korea, Japan and Malaysia.

The LNG export surge triggered a steep rise in the price of domestic gas, forcing some........

© The Conversation