Australian east coast LNG producers Gladstone LNG (GLNG), Australia Pacific LNG (APLNG) and Queensland Curtis LNG (QCLNG) have extended their agreement with the Federal Government to maintain a secure supply of gas to the east coast domestic market until 2020.
LNG producers have agreed to offer uncontracted gas to the domestic market on reasonable terms in the event of a shortfall in 2018 and 2019 instead of selling it on the international market, unless equivalent gas volumes have first been offered to the domestic gas market on competitive market terms.
This domestic mechanism could hinder gas exports as real concerns existed last year around the increase of domestic gas prices and the security of gas supplies for the domestic market. Australia experienced natural gas supply shortages in the eastern and southeastern parts of the country and therefore an increase in domestic natural gas prices, even though it became the world’s second largest LNG exporter in 2015.