Senate Inquiry into Gas Reservation Bills
Opening statement of Samantha McCulloch, Chief Executive, Australian Energy Producers
Friday 23 October 2026
Good morning. I begin by acknowledging the Traditional Owners of the land we’re meeting on today, the Ngunnawal and Ngambri People, and I pay my respects to their Elders past, present and emerging.
Australian Energy Producers welcomes the opportunity to give evidence to this inquiry.
The Australian oil and gas industry supports a well-designed, prospective east coast gas reservation scheme.
The test is whether it delivers reliable, affordable gas for Australians while sustaining the investment needed to supply it over the long term.
Our industry has engaged constructively with the Government over the past 12 months on the design because most market participants would agree that the current gas market framework is not working and is in urgent need of structural reform.
This is the third major intervention in the east coast gas market in almost as many years.
Like the price caps and the Gas Market Code before it, the proposed reservation scheme is driven by short-term price outcomes at the expense of an enduring, sustainable policy framework.
The legislation as currently drafted falls well short of what is needed to provide the long-term certainty and stability required for all market participants.
Small gas producers, LNG exporters, state governments, investors and trade partners have all raised serious concerns about the current design.
Without significant changes, the scheme risks undermining the investment and competition needed to deliver reliable, affordable gas.
Our central concern remains the proposed “must sell” requirement, which potentially forces producers to sell gas below cost or on non-commercial terms.
This is compounded by the requirement to oversupply the domestic market by 10 per cent.
These features risk crowding out smaller, domestic-focused producers, weakening competition and investment, and increasing the risk of higher prices and supply shortfalls over time.
Industry cannot invest the billions of dollars in new gas supply needed to secure Australia’s long-term gas needs under policies that fundamentally undermine the commercial viability of those investments.
The Government’s impact analysis found the policy could reduce gas production and investment, while increasing the regulatory burden on industry by $75 million over 10 years.
The impact analysis accepts the scheme will result in a “transfer of value from gas producers to domestic users” and could reduce LNG exports.
This is at odds with the objectives of a more efficient, transparent and resilient market and maintaining Australia’s standing as a reliable LNG trade partner.
While there have been some improvements from the exposure draft, further changes are needed to achieve a workable scheme.
We recommend key amendments to improve the design, including replacing the “must sell” requirement with a “genuine offer” obligation, replacing the 10 per cent oversupply provision with a domestic supply obligation more closely calibrated to market demand, and more certainty for Northern Territory and Western Australia’s LNG exporters that are not connected to the east coast gas market and should be exempt in practice.
The Australian Energy Market Operator and ACCC have confirmed the east coast market will be well supplied until at least 2029, but continued investment in new supply and infrastructure will be critical to avoid shortfalls beyond that, especially in southern states.
Australia cannot afford to have another failed market intervention.
Our industry remains committed to working with the Government and Parliament to get the design right and deliver a durable framework that supports reliable, affordable gas for Australian households and businesses for the long-term.
END