Shell Australia has voiced strong opposition to a proposed government mandate requiring LNG producers to reserve a portion of their output for the domestic market. The company's chairwoman described the plan as an "extraordinarily heavy-handed intervention" that could lead to future market failures.
The Australian government's attempt to secure domestic gas supply through mandates could lead to significant price increases and market distortions, according to major LNG producer Shell, potentially impacting energy costs for consumers and businesses.
Shell has voiced strong opposition to a proposed Australian government plan aimed at securing domestic gas supply by mandating liquefied natural gas (LNG) producers to reserve a portion of their output for local use. The proposal, which emerged in response to concerns about potential gas shortages on the east coast, has been met with criticism from the energy giant.
Cecile Wake, chairwoman of Shell Australia, described the plan as an "extraordinarily heavy-handed intervention into a market that is actually working well." The proposal, initially suggesting producers reserve 20% of their output for the Australian market, has evolved to consider up to 20% of output. Shell argues that the stipulation requiring LNG producers to "must supply" volumes equal to 110% of east coast demand, rather than simply offering them on the domestic market, would have a disastrous effect on prices and "sow the seeds of tomorrow's market failure."
The plan is scheduled to take effect from 2028, giving LNG majors time to capitalize on current high global gas prices, which have surged due to supply disruptions, including a force majeure from QatarEnergy.
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