Australia to expand 20% domestic LNG supply rule to all projects

The Australian government plans to expand a policy requiring liquefied natural gas (LNG) producers to reserve 20% of their export volume for domestic use, applying it to all projects and existing contracts. According to a policy draft released on May 26, export agreements signed before Dec. 22, 2025, will be honored, but only if the project can prove it cannot meet the 20% domestic supply obligation while fulfilling its contractual commitments. The industry has strongly opposed the measure, arguing it will deter investment and damage Australia's reputation as a reliable exporter. The policy change comes as Australia addresses a projected natural gas shortage on its east coast and as the war in Iran disrupts Qatari supplies, which account for about one-fifth of the global LNG market. Companies can meet the requirement in several ways, such as procuring third-party gas, swapping volumes, reducing exports, or buying LNG on the international market. The policy aims to create a "reasonable level of oversupply" domestically, after which regulators may permit the export of surplus gas, meaning the actual impact on Australian exports is expected to be well below 20%.