Australian industry reliant on gas for ‘foreseeable future’, resources minister tells press club

The resources minister, Madeleine King, says Australian industry will be reliant on gas for the “foreseeable future”, and that the national gas reservation scheme will push down power prices.

But the Western Australian MP did not put a price tag on the cost of gas under the proposal – as the former opposition leader Peter Dutton once did – nor predict when households and businesses would start to see that financial relief.

The national gas reservation scheme will force gas companies to set aside 20% of exports for domestic use, and is expected to come into effect from January 2028.

It will give the Australian Energy Regulator the power to force companies to meet a target of 110% of projected demand each year. It will also limit ministerial discretion and replace the Turnbull-era domestic gas security mechanism.

In an address to the National Press Club on Wednesday, King said keeping gas affordable for households and businesses was a critical part of the scheme’s primary focus. She expected the scheme would “push down” gas prices without crashing the market.

“We expect the oversupply part of the reservation to put that modest oversupply into the system, which will push down those prices,” she said.

“So we do expect to see that downward pressure on prices. It’s a very important aspect of the whole scheme.

“We all know having too little gas to fuel renewables or provide for the manufacturing industry is as dangerous as having a massive oversupply, which crashes the market, but also it can undermine investment in renewables.

“So, it’s a really fine balance that we’ve got to achieve here.”

The minister said gas was central to heating homes, keeping manufacturing industries running, processing critical minerals and rare earths domestically, and supporting the rollout of renewables.

When asked whether she had a timeline to phase out Australia’s reliance on gas, King said it would continue to play an important role unless a viable replacement was found.

“The truth is, it’s hard to establish a date because we don’t yet have the replacement for some of the industries that will that need it,” she said.

“Right now, there is no replacement for gas. I am totally supportive of any kind of research or development that finds a replacement, whether it’s just in lower emissions or alternative. But right now, and for the foreseeable future, that does not exist.”

The shadow resources minister, Susan McDonald, said “numerous questions” remained over the design and viability of the scheme.

McDonald didn’t identify particular concerns but said the bill’s greatest risk was the “capitulation of Labor to pressure from the Greens political party and noisy activists”.

“It is now up to Labor to choose whether to work constructively with the Coalition, for the best interests of Australia, or kowtow to the Greens and their anti-gas, anti-Australian ideology,” she said.

The shadow industry minister, Andrew Hastie, didn’t explicitly support or reject the proposal, telling News24 that there had been a “very short consultation period”.

“We don’t want to see price controls, we want to see existing schemes honoured, and we want to see more investment,” he said.

“We want to see drilling and digging and more gas extracted for use by Australians.”

The Greens’ deputy leader, Steph Hodgins-May, described the policy as a “massive backflip for helping everyday Australians”.

“It’s been watered down and, frankly, appears to us to be something that’s been written by the gas industry for the gas industry,” she told the ABC.

The Greens and crossbenchers, including the ACT senator David Pocock, have argued a 25% tax on gas exports would keep more gas onshore and raise revenue for the government for any gas sent overseas.

King told the press club the government had “no plans” to take up the popular policy.

“Taxing the gas industry doesn’t make gas cheaper; it only serves to make it more expensive,” King claimed.

“The focus of this policy, this national reservation scheme, is about making sure Australians get access to Australian gas while enabling an export industry to continue.”

The Institute for Energy Economics and Financial Analysis’s lead gas analyst, Josh Runciman, said the government will need to watch whether exporters try to buy other gas projects.

“If they do, this will increase their own production without necessarily increasing domestic gas supply, which would undermine the intent of the scheme,” he said.

The peak body for the oil and gas industry, Australian Energy Producers, warned the reservation scheme would “weaken investment signals and crowd out smaller, domestic-focused producers”.

“Artificially oversupplying the market might deliver a short-term sugar hit, but it risks driving domestic-focused producers out of the market, reducing competition and ultimately putting upward pressure on prices and increasing the risk of future shortfalls,” chief executive Samantha McCulloch said.