# Shell Challenges Australia’s Proposed Domestic Gas Reservation Scheme

By Riza Dagoc

Canonical URL: https://www.tokenpost.com/news/regulation/30885
Published: 2026-10-13T07:22:14.000Z
Updated: 2026-10-13T07:22:14.000Z
Section: Regulation

> The plan would require LNG exporters to supply up to 20% of export volumes to domestic customers, while Shell warns the policy could weaken investment in long-term gas projects.

Shell is challenging Australia’s proposed Domestic Gas Reservation Scheme, which would require liquefied natural gas exporters to supply up to 20% of their export volumes to domestic customers as Canberra seeks to address potential shortages and price pressure.

The proposed Domestic Gas Reservation Bill 2026 would establish Australia’s first national gas reservation scheme. The plan is designed to increase domestic supply, reduce price pressure and support manufacturing while preserving existing export contracts.

The scheme could make up to 200 petajoules of additional gas available each year, compared with potential shortfalls of up to 140 petajoules forecast by the Australian Energy Market Operator. The Australian Energy Regulator would calibrate the obligation to 110% of forecast demand, subject to the 20% export cap.

Shell Australia Country Chair Cecile Wake said long-term gas projects compete globally for capital and that Australia must give investors confidence to keep funding them.

“Australia does not have a right to that capital. We have to earn it,” Wake said.

Wake also argued that redirecting existing supply would not create lasting energy security.

“There is no lasting energy security in simply reallocating scarcity,” she said.

The proposal would apply separately to Australia’s physically separate eastern and western gas markets. The obligations would be aligned with the market in which the export facilities operate, while existing export contracts would receive transitional protections.

The government received more than 140 submissions during consultation on the framework. It plans to refine the draft legislation before introducing it to Parliament later in 2026.

Licence applications are scheduled to begin Jan. 1, 2027. The timing and final design of the domestic supply obligation remain subject to the draft legislation and subsequent government decisions.