Labor relaxes 20% LNG export reservation rule, easing Asia supply fears from Jan 2028

After months of negotiations involving Japan, South Korea, and Malaysia officials, Australia's Labor government has altered rules regarding liquefied natural gas exports. The new policy takes effect in January 2028. Under the original plan, gas shippers would have required reserving up to 20 percent of their export volumes for local Australian customers. This requirement was designed to force a 10 percent domestic oversupply annually to lower fuel costs. However, federal ministers introduced concessions during talks with producers and buyers. These changes allow ministers to lower the reservation percentage if forecast domestic demand is weak. The rules also grant discretion to reduce supply obligations when producers are constrained by pre-existing contracts or pipeline capacity. Most Australian LNG comes from Queensland and Western Australia. Currently, the fuel is sold on long-term contracts to Asian markets. Officials from the three neighboring nations lodged appeals over the past four months regarding these proposals.