Dutton’s imitation reservation gaslights Australians

Peter Dutton grabbed headlines in his Budget reply speech by pledging to introduce a ‘gas reservation’ for Australia’s east coast. This proposal is not new (the AWU’s own history with it is detailed below). But what does a ‘gas reservation’ mean, and how would it work?

A reservation would mainly aim to address high gas prices. Because Australia now exports gas as LNG, local users are forced to match the high prices paid on the international market. This is a problem for everyone, but especially workers in industries that require large amounts of gas in their day-to-day operations. Manufacturers have come under real and serious pressure since Australia commenced LNG exports. By reserving enough gas to meet Australia’s own needs – restricting it from being exported – we could ensure local users only compete with other locals when buying gas. This would bring down prices.

Sounds good, right? Unfortunately, a look under the bonnet of Peter Dutton’s idea reveals something different: an imitation reservation. His proposal won’t come close to meeting the needs of workers and households. It leaves Australians with the scraps – reserving only a small portion of what we produce and what we need, and allowing the rest to be sold at the same high prices as ever.

Rather than gaslighting us, our leaders should step up and deliver the real reservation the east coast is crying out for. We produce more than enough gas for a genuine reservation – we just need less political games and more action to get it done.

What is Peter Dutton proposing? 

Peter Dutton’s proposal would ‘require east coast LNG spot cargoes to be reserved for the local market’. ‘Spot cargoes’ refers to excess gas produced over and above that required under long-term contracts signed by gas producers. It is sold as LNG to foreign buyers on a one-off basis.

This year, the government expects east coast producers to export 70 petajoules[1] of gas as spot cargoes. This amounts to barely a fly on the elephant that is our gas industry: Australia produces nearly 6,000 petajoules of gas each year.[2] Meeting the needs of the east coast would require around 8% of our gas, but the Liberals would

reserve just 1%. That’s not ‘Australian gas for Australians’ as Dutton claims. It’s the lion’s share for overseas and the leftovers for us.

What about if we just focus on the east coast? If we only compare the east coast’s gas requirements with gas produced in the east and connected by pipeline to east coast users, how does 70 petajoules stack up? Once again, it falls well short. The east coast is expected to consume around 467 petajoules this year. This means Dutton would supply just 15% of the gas that east coast workers and businesses need.[3] We would continue to pay the same high prices for the remainder.

Can we reserve enough gas for what we really need?

Absolutely! Australia produces much more gas than our local market will ever require, and a domestic reservation can and should be much broader than the Liberals’ proposal. We can also meet our own needs without interfering with the long-term export contracts that gas producers have already signed. In addition to spot cargoes, a reservation could cover:

• A proportion of all gas produced in new gas fields,
• A proportion of all gas produced in expanded gas fields,
• The large amount of gas bought by LNG exporters on the domestic market, covering for when their own production falls short of their export commitments, and/or
• A proportion of all gas currently produced to supply long-term export contracts, once those contracts expire from 2031 onwards[4].

We also know this is possible because Western Australia already does it. WA’s longstanding state reservation ensures that nearly all the gas needed in the west is supplied at fair prices.[5] 

In addition to providing the gas we actually need, it would be harder for gas producers to dodge a wider reservation. Under Dutton’s proposal, what happens if exporters decided to tie up more gas in long-term contracts? Less spot cargoes would mean less affordable gas for us, putting foreign buyers first and Australians second.

How did Peter Dutton come up with this idea?

Peter Dutton says his idea is ‘something he’s been working on with key figures in the gas industry’.[6] We’re not surprised: His proposal leaves producers largely free to sell gas at the same high prices as ever!

Rather than taking his cues from the gas industry, our leaders need to listen to unions, manufacturers, consumer advocates and the many other groups that have been calling for a serious reservation for years.

Doesn’t the AWU support a gas reservation?

The AWU has proudly campaigned for a domestic gas reservation. We were the first to bring the issue into the public eye with our Reserve our Gas campaign from 2014 on. Our campaign was always about getting gas for all workers, manufacturers and households at fair prices. In other words, a reservation to support the domestic market in full.

Our campaign was never called ‘Reserve 1% of our gas’, because we want real and definitive solutions. Not an imitation reservation that bails on Australians after the first step.

We already have the resources and the means to do it.

We just need less gaslighting and more serious action.

 [1] ‘Petajoules’ is a measure of gas commonly used to discuss high-volume buying and selling

[2] https://www.accc.gov.au/system/files/accc-gas-inquiry-interim-report-december-2024.pdf, p. 19; https://aemo.com.au/-/media/files/gas/national_planning_and_forecasting/wa_gsoo/2024/2024-wa-gas-statement-of-opportunities.pdf?la=en, p. 114; https://www.inpex.com/english/ichthys/; https://www.inpex.com.au/projects/prelude-flng/

[3] https://www.accc.gov.au/system/files/accc-gas-inquiry-interim-report-december-2024.pdf, p. 19

[4] https://www.accc.gov.au/system/files/accc-gas-inquiry-interim-report-december-2024.pdf, p. 137

[5] https://aemo.com.au/-/media/files/gas/national_planning_and_forecasting/wa_gsoo/2024/2024-wa-gas-statement-of-opportunities.pdf?la=en, pp. 6, 113-114

[6]https://www.youtube.com/watch?v=5Yc9Xq3sOco