CanberraTripled gas prices triggered Australia’s first export quota.
LNG exports linked domestic prices to global markets a decade ago; the 20% reservation forces supply priority before 3 Queensland producers can export overseas, starting July 2027.
A parliamentary inquiry into a 25% gas export tax tables its report Thursday.
Sources: The Guardian
THE LINKAGE PROBLEM
Before LNG export terminals open, domestic gas trades at the cost of local production. After they open, domestic prices converge to the export netback — global LNG price minus shipping and liquefaction. Australia learned this the hard way: east-coast wholesale gas roughly tripled within years of the Gladstone terminals firing up in 2015.
THE QUEENSLAND TERMINALS
Three coal-seam gas export plants on Curtis Island near Gladstone — APLNG, GLNG, QCLNG — turned Australia into the world's largest LNG exporter by 2020. They were sanctioned on the assumption that CSG fields would supply both export contracts and domestic demand. The fields underdelivered; exports were prioritized; the southern states (Victoria, NSW) ran short.
THE WA PRECEDENT
Western Australia has had a 15% domestic gas reservation since 2006 — a condition Premier Alan Carpenter imposed on every new LNG project after watching Queensland-style price shocks loom. Two decades on, WA wholesale gas trades at a fraction of east-coast prices. The east-coast reservation now copies a policy the west has run continuously for nearly twenty years.
WHO PAYS
A reservation transfers value from LNG joint-venture partners — Shell, ConocoPhillips, Sinopec, Origin, Santos — to Australian manufacturers and households. The lost export margin is the producers' loss; the avoided global-parity price is the domestic users' gain. Sovereign-rights and stability-clause arguments in the original project agreements are why this took a decade of price pain to legislate.
THE TAX ALTERNATIVE
A 25% export tax — the parliamentary option tabled Thursday — captures the same value differently: the government takes the wedge between domestic and export price as revenue, then chooses whether to rebate it. A reservation lowers the domestic price directly; a tax raises the export price and sends the spread to Treasury. Norway's petroleum tax regime collects ~78% on offshore production this way; Australia's existing PRRT collects almost nothing from LNG because of accelerated-deduction rules drafted in the 1980s.
THE RESOURCE-CURSE INVERSION
Most resource-curse stories are about poor countries failing to capture rents from foreign extractors. Australia is the rare wealthy democracy that exported its commodity boom so cleanly that domestic users became the casualty. The reservation debate is whether sovereign discretion over a domestic resource survives once the export contracts are signed.