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The Gas Market Review Consultation reflects widespread consensus amongst stakeholders that current instruments – the Code, ADGSM and HoA – have failed to deliver gas supply certainty, affordability, or investment confidence. While consensus exists on the need for reform, views diverge on the design and implementation of that reform, particularly the balance between domestic supply security and market efficiency.
In this paper, we have summarised the key themes arising from public submissions on the Gas Market Review. We have not mentioned each individual submission or all content exhaustively. Rather, this paper distils the main areas of alignment and divergence across key stakeholder submissions.
| Areas of consensus include: |
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| Areas of divergence include: |
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The full Gas Market Review Consultation submissions can be found here: Make a submission - Gas Market Review Consultation - Department of Climate Change, Energy, Environment and Water
A report with recommendations to the Australian Government is expected by the end of 2025, with implementation steps slated for 2026. We plan to release a further paper with our insights once these recommendations are available.
Getting the policy settings right is pivotal in attracting and maintaining long-term investment, increasing access to supply and reducing prices, preserving Australia's reputation as a reliable trading partner and enabling the transition to net zero. There are various lessons learned from Western Australia's approach, including its domestic reservation policy, that are referred to in this paper.
We have observed the many challenges created by the current instruments (across each stakeholder group below) and have advised clients seeking to navigate its interpretation and intention. These issues are not new, but require a fresh and forward-looking approach - with industry and government tackling it with a more united front. If we put customers at the centre of the design and address structural issues to secure reliability and affordability in a sustainable, long-lasting way, there are possible pathways for Australia to achieve its goals. The reality is that gas will be required in Australia for the foreseeable future, and remains a key transition fuel towards a working, decarbonised economy. We look forward to the year ahead of further efforts by all to get closer to these outcomes.
Overview of Gas Market Instruments
The Gas Market Review covers three key regulatory instruments: the Australian Domestic Gas Security Mechanism (ADGSM), the Competition and Consumer (Gas Market Code) Regulations 2023 (Code), and the Heads of Agreement (HoA). The National Gas Law and National Gas Rules are also under reform, but are not the focus of this paper.
These instruments have been central to the Australian Government's efforts to address high gas prices and the forecasted shortfall in East‑Coast gas supply, with a timeline and key features below.
| Instrument | Overview |
| ADGSM | The ADGSM was first introduced on 1 July 2017 as a safeguard to ensure sufficient domestic gas supply by enabling the government to restrict LNG exports if a shortfall was forecast. In response to evolving market conditions, the mechanism was tightened effective 1 April 2023, introducing more frequent assessments, mandating equal shortfall-sharing among exporters, and enabling tradable export permissions. The ADGSM is due to expire on 1 January 2030. |
| The Code | The Code, effective from 11 July 2023 with full implementation by 11 September 2023, was introduced to promote transparency and adequate supply of gas on reasonable price and on reasonable terms. The Code applies predominantly to producers in the East Coast of Australia. |
| HoA | The HoA was first signed in 2020 and later renewed to continue until 1 January 2026. The HoA is a voluntary, industry-led agreement between the Commonwealth and East Coast LNG exporters to ensure sufficient, competitively priced gas for domestic users – at prices no higher than those paid by international customers – and to prevent supply shortfalls by securing gas for the East Coast market. |
Consultation themes
The Gas Market Review has drawn extensive feedback from regulators, producers, consumers, gentailers, and government, highlighting widespread concern regarding the effectiveness of the current instruments in delivering supply certainty and affordability. This section summarises the key themes emerging from various public submissions, including across governance reforms, contracting flexibility, price regulations, and proposed long-term policy solutions.
Regulators
The ACCC's and AER's submissions to the Gas Market Review Consultation emphasise the limited effectiveness of the current gas market instruments (the Code, ADGSM and HoA) in improving domestic supply and affordability. The regulators express strong support for streamlining governance and reporting across the AEMC, AER, AEMO and ACCC, as well as for aggregated, anonymised data reporting (excluding real-time price disclosure due to risks of coordinated conduct). The ACCC also supports clearer roles and mandatory information-sharing across agencies.
In particular, the ACCC critiques the gas EOI and offer processes as being ineffective and inflexible. Both regulators note the dominance of bilateral contracting, with facilitated markets primarily used for short-term balancing. We generally align with these views. The gas EOI and offer process are not fit for purpose (on both sides of a deal) for the practical realities of how gas is contracted in the market. These aspects of the Code are overly prescriptive while also having areas of drafting uncertainties, leading to interpretation and implementation challenges.
Producers / Sellers
(a) Larger producers
The submissions of many larger gas producers underscore the deterrent effect that price caps and regulatory uncertainty have had on long-term investment. These producers generally support flexible reservation schemes (preferring prospective, regionally targeted policies over the ADGSM) and oppose rigid contracting rules (recommending removing or simplifying EOI and offer processes).
These large producers express support for transparent centralised, streamlined reporting (for example, via the GBB), consolidating governance roles and retiring the ACCC Gas Inquiry.
Price caps are opposed because they purportedly distort market signals and, in practice, create a price floor.
These large producers particularly endorse removing barriers to new supply and streamlining approval processes.
(b) Queensland producers
The submissions of certain Queensland gas and LNG producers express concern regarding the ADGSM and HoA undermining Australia's reputation as a reliable energy partner. These producers support prospective reservation schemes applying only to new projects and protecting existing contracts.
Adopting the same view as large producers, these Queensland producers oppose price caps – framing them as unrealistic and harmful to investment – and call for streamlined environmental and regulatory processes. They support retiring the ACCC's Gas Inquiry and reforming governance structures by shifting reporting to AEMO.
A major Queensland producer proposes the establishment of an export licensing and permitting regime that delivers long-term certainty for LNG producers while enforcing clear, equitable domestic supply obligations.
There is said to be potential for this regime, however, to heighten regulatory and investor uncertainty by granting the Minister broad discretion over LNG export approvals. Such discretion may undermine the predictability of what is currently a "free-market" product, giving rise to sovereign risk concerns and potentially diminishing confidence in Australia's reputation as a reliable energy supplier.
(c) Smaller producers
Smaller producers broadly converge on the view that accelerating new gas market supply – supported by infrastructure investment and streamlined approvals – is the solution to East Coast gas market shortfalls. Rejecting retrospective reservation policies for their distortionary effects, smaller producers specify that any reservation must be prospective only and linked to increased production. These stakeholders also align on the common theme that regulatory complexity and duplication should be reduced to bolster productivity.
Some of these stakeholders focus on specific issues such as Commonwealth support for a new pipeline connecting the Beetaloo Basin to the East Coast. Others advocate for winding back the Code and incentivising voluntary land tenure transfer to active developers. Some also frame LNG import terminals as a sign of market failure to be considered only as a last resort.
Buyers
(a) Gentailers
Gentailers generally take the view that price caps distort market signals and hinder investment, instead preferring market-based competitive frameworks over prescriptive instruments. This cohort generally advocates for flexible contracting, critiquing the EOI and offer processes as overly rigid and ineffective.
The submissions of certain gentailers strongly support centralised, streamlined reporting (but express concern over the burdens of real-time reporting) and consolidating the roles of governance agencies to eliminate duplication. These submissions particularly emphasise underwriting and facilitating long-term investment in gas market supply and infrastructure.
(b) Consumers
Many gas consumers are primarily focused on immediate short-term supply risks (2026-27), rather than longer-term considerations in 2028 and beyond. This cohort generally supports phasing out the ADGSM post-2028, but their views diverge on future interventions. Some endorse a permanent reservation policy combined with a pricing mechanism to decouple domestic prices from LNG netback and oppose LNG import terminals. Others reject new reservation schemes and support LNG import terminals.
Aligned with the perspective of many large producers, some consumers also view price caps as distorting market signals and delaying investment. Submissions are concerned with issues of governance and regulatory transparency – calling for mandatory disclosure of indicative price ranges - while others engage with contracting concerns. These consumers call for clearer, enforceable rules and integration of the HoA into the Code.
Some consumer submissions indicate support for standardising key GSA terms and introducing an export licensing regime, with temporary price controls during the transition phase. However, the topic of export licensing remains contentious, with some buyers (particularly gentailers) preferring a more competitive framework.
State governments – Victoria, Queensland, WA and NT
These governments recognise the urgency of achieving new supply and infrastructure investment, and the need for long-term policy stability and investment certainty. However, their priorities and proposed means of achieving this diverge.
The Victorian Minister for Energy & Resources advocates for stronger gas market intervention through enforceable domestic reservation and supply obligations. It also endorses expanded AEMO powers and winter storage planning.
The Queensland government cautions of the undermining effect domestic reservation obligations could have on LNG export competitiveness, instead proposing a market-led solution that incentivises new supply through streamlined approval processes and coordinated national policy, without exacerbating inequitable fiscal burdens. This sentiment is echoed to some extent in the submissions by the Northern Territory government, which focuses on facilitating Beetaloo development (and thereby fostering energy security) through regulatory certainty and midstream infrastructure. Both of these governments promote streamlining approvals and minimising regulatory duplication to accelerate project delivery.
Western Australia highlights that its flexible reservation policy and infrastructure commitments have effectively insulated the WA gas market from global volatility – something that East Coast reforms seek to reproduce without compromising investor confidence. It also cautions against any reforms that risk unsettling their current arrangements.
Pipeline operators ("pipeliners")
Gas pipeliners emphasise the essential role of gas infrastructure in ensuring affordable and reliable supply throughout the energy transition. Both long-term contracting and regulatory stability are critical for pipeline and storage investment. The view is that short-term interventions, such as the ADGSM, fail to address systemic hurdles to supply.
The submissions of certain pipeliners express support for a prospective reservation mechanism to secure long-term supply, modelled on that of Western Australia but adapted to the East Coast. Incremental expansion of existing pipelines is promoted as the most timely and cost-effective means of achieving the required infrastructure expansion. Innovative stop-gap measures such as virtual LNG import terminals are also proposed by one pipeliner as a short-term solution to immediate supply shortfalls.
Market bodies and associations
Market bodies broadly agree that the current regulatory instruments require fundamental reform, having failed to deliver supply certainty, affordability, or investment confidence. These bodies generally advocate for a coherent, streamlined framework to mitigate regulatory uncertainty, prioritise long-term security of supply, and minimise any superfluous Ministerial discretion.
As is the position adopted by many other stakeholders, market bodies oppose prescriptive contracting and rigid price controls, but support clearer governance roles and consolidated reporting.
Climate groups
Climate groups unanimously contend that the Gas Market Review must prioritise a phase-out of fossil gas to meet Australia's climate commitments and international obligations. They reject any new gas infrastructure or projects, instead supporting electrification, renewable energy investment and energy efficiency as the primary means to achieving energy security.
Phasing down LNG exports is a key area of concern, with climate groups calling for existing gas to be redirected to domestic needs, and for regulatory frameworks to be aligned with the Paris Agreement and net zero targets.
Divergence exists between these climate groups on policies for export control (such as, export licensing versus outright export bans) and the appropriateness of transitional reservation policies.
Domestic Reservation Policy & WA benchmark
Multiple stakeholder cohorts support introducing a domestic reservation policy to secure long-term supply, with many citing Western Australia's approach as a benchmark. Large producers, buyers, the Victorian government and certain Queensland-based LNG exporters advocate for solutions such as replacing the ADGSM export restrictions with a regionally targeted reservation policy. There are calls to revert the ADGSM to an annual activation process with export limits applying only to LNG producers in net deficit, and ensuring that any changes protect existing LNG contracts while applying solely to future projects.
Stakeholders warn that discretionary export restrictions risk breaching trade agreements, deterring investment and damaging Australia's reputation as a reliable LNG supplier by diverting contracted volumes from key trading partners (e.g., Japan, Korea, Malaysia and China). These submissions propose for reservation to replace the ADGSM's opaque shortfall criteria and discretionary export restrictions.
As an example, Western Australia's domestic gas policy (Policy) was first formally implemented in 2006. The Policy requires that LNG projects within the Western Australian jurisdiction (e.g. onshore and within 3 nautical miles of the coast) are required to reserve a percentage of LNG production for the domestic gas market over the life of the project. The state government views the Policy as having been critical to Western Australia's energy security.1
The Policy is not implemented through legislative instrument and is instead implemented through long term contracts between LNG producers and the state government.2 These contracts are entered into prior to project commencement as a condition of approval of the LNG export project, so the Policy does not operate retrospectively. Rather, LNG producers are aware of their domestic gas commitments, and able to economically sanction their LNG export project, based on those commitments.
Projects which produce gas offshore for LNG export are currently required to reserve a domestic gas equivalent to 15% of LNG production. Projects which produce gas onshore for LNG export are entitled to export up to 20% of their gas production for LNG export.3 Matters relating to prices and contract terms for domestic gas are set by market participants through confidential negotiations and are not addressed by the Policy. The Western Australian government has stated that it does not seek to intervene in such matters, that the implementation of the Policy has meant that the Western Australian domestic gas market is not integrated with global LNG markets (as is the case in the East Coast gas market), consumers have been shielded from the price volatility experienced on the East Coast and the Policy has consistently delivered lower domestic gas prices.4
The Policy has been reviewed three times in the past five years and is due for another review in 2026/2027. An updated WA Domestic Gas Statement has recently been published to increase transparency in the WA domestic gas market.5 With domestic gas shortalls also potentially forecast in Western Australia from 2030,6 it remains to be seen whether the Policy will also be subject to change.
Summary of areas of consensus and divergence
Areas of consensus amongst stakeholders
(a) Limited effectiveness of current instruments
There is broad consensus amongst the stakeholders that the Code, ADGSM and HoA have not materially improved domestic gas market affordability, supply, or investment certainty. Most stakeholders support replacing or reforming these instruments.
(b) Price regulation
There is consensus that the gas market price cap did not have the desired outcome of bringing down prices. Producers and gentailers contend that the $12/GJ price cap distorts market signals by acting as price floor in practice, and therefore endorse its removal or redefinition. The Victorian Minister for Energy & Resources also critiques the price cap as insufficient, instead supporting its strengthening to protect domestic consumers.
(c) Contracting rigidity
Most stakeholders are of the view that the EOI and offer processes under the Code are overly rigid, exacerbate bargaining power imbalances, and delay negotiations. There is support for more flexible, market-based contracting mechanisms.
(d) Support for domestic reservation policy
Many stakeholder cohorts (e.g., large producers, Queensland producers, the Victorian government and regulators) support a reservation scheme to secure long-term domestic supply. Some of these stakeholders specifically endorse a scheme modelled on Western Australia's approach.
(e) Need for governance reform
There is strong consensus on the need to streamline regulatory roles and consolidate reporting requirements across the AER, AEMC, AEMO and ACCC through a centralised reporting framework that minimises duplication.
(f) Transparency and data reporting
The implementation of centralised, anonymised data reporting (e.g., via the GBB or AEMO) is generally supported, although stakeholders caution against real-time price reporting due to risks of coordinated conduct and market distortion. Some stakeholders support a model of periodic reporting as a compromise.
Areas of divergence amongst stakeholders
(a) Standardised Gas Supply Agreements (GSAs)
Many stakeholders oppose the introduction of a standardised GSA template, citing the need to maintain contractual flexibility. Although, a more limited cohort endorses optional guidance for administrative terms.
(b) Design of reservation policy
There is disagreement on the scope of a proposed domestic reservation policy. Government stakeholders tend to advocate for enforceable obligations from project inception, whereas producers and buyers prefer flexible prospective policies protecting existing contracts.
(c) Export controls
There are mixed opinions on introducing a licensing or permitting regime. Some buyers and producers support clear frameworks that minimise ministerial discretion, whereas otherwise warn of sovereign risk regardless of framework design, and climate groups demand outright export phase-downs or bans.
(d) Role of LNG import terminals
Some stakeholders, including consumers, support LNG terminals as transitional infrastructure, whilst others question their long-term viability due to cost and market distortion concerns.
(e) Government intervention
The Victorian government advocates for stronger intervention through enforceable obligations and reservation, whereas the Queensland and Northern Territory governments favour more minimal interference with streamlined approvals.
(f) Interim measures
Some stakeholders propose intermediate measures to secure short-term gas supply, while others reject interim fixes in favour of fulsome structural reform.
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With decades of experience, our team provides strategic insights across the full supply chain from upstream exploration & production, LNG marketing & trading, mid-stream and downstream transport & sales. This includes advising on joint venture structuring and many of the most significant M&A transactions in the sector. We also support clients in a range of heavy-emitting industries on their decarbonisation efforts, including through procuring renewable energy, making changes to technology, investing in carbon projects, carbon credits/offsets and emissions management and reporting.
Footnotes
1. Department of Jobs, Tourism, Science and Innovation, Government response to the Economics and Industry Standing Committee's 'Inquiry into the WA Domestic Gas Policy, https://www.wa.gov.au/system/files/2024-09/0172_domgas_jtsi_submission_to_parliamentary_inquiry.pdf.
2. The exception are those commitments contained within state agreements e.g., the North West Shelf Gas Project and the Gorgon Project.
3. This arrangement will remain in place in relation to onshore gas production until 2031, after which, these projects will be required to reserve 100% of their production for the domestic gas market.
4. Department of Jobs, Tourism, Science and Innovation, Government response to the Economics and Industry Standing Committee's 'Inquiry into the WA Domestic Gas Policy, https://www.wa.gov.au/system/files/2024-09/0172_domgas_jtsi_submission_to_parliamentary_inquiry.pdf.
5. WA Domestic Gas Policy: WA Domestic Gas Statement 13 November 2025, https://www.wa.gov.au/government/announcements/update-the-wa-domestic-gas-statement.
6. 2024 Western Australia Gas Statement of Opportunities, Energy Market Operator, December 2024.
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