Australia has revised its proposed gas reservation policy, moving away from a fixed requirement that LNG exporters set aside 20% of their production for domestic consumers.

Under the revised proposal announced on September 10, the 20% figure would become a maximum level, with the Australian Energy Regulator determining the actual amount required according to conditions in individual regional markets.

The government says the changes are designed to improve the availability of natural gas for Australian households and businesses while reducing the risk of sudden price increases. Energy Minister Chris Bowen said the revised system could make as much as 200 petajoules of additional gas available each year, exceeding projected shortages in the east-coast market.

The proposed system is expected to begin on January 1, 2028, six months later than previously planned. The government has opened the draft policy for consultation, with submissions due by September 24.

Reservation requirements would also differ between regions. Western Australia would retain a 15% domestic reservation requirement, while the Northern Territory would largely be excluded because its domestic market is comparatively small.

The policy could have a significant impact on LNG projects operated by major companies including Origin Energy, Shell and Santos. Existing contracts would be exempt from the proposed obligations.

Industry groups have welcomed some of the changes but warned that excessive domestic supply could reduce prices to levels that discourage investment in future gas production.

The government, however, argues that ensuring a reliable domestic supply is essential for protecting Australian consumers from international energy-market volatility.

Australia is one of the world’s major LNG exporters, making the balance between overseas exports and domestic energy security an important economic and political issue.

The proposal will now undergo further consultation before legislation is expected to be introduced to parliament later this year.