The Australian Domestic Gas Security Mechanism

On 20 June 2017, the government announced that it would implement the Australian Domestic Gas Security Mechanism (ADGSM).

The objective of the ADGSM is to ensure there is a sufficient supply of natural gas to meet the forecast needs of Australian consumers by requiring, if necessary, LNG projects which are drawing gas from the domestic market to limit exports or find offsetting sources of new gas.

The ADGSM sits within the new Division 6 of the Customs (Prohibited Exports) Regulations 1958 which have been amended by the Customs (Prohibited Exports) Amendment (Liquefied Natural Gas) Regulations 2017. The ADGSM came into effect on 1 July 2017.

Details about the operation of the ADGSM are contained in the Customs (Prohibited Exports) (Operation of the Australian Domestic Gas Security Mechanism) Guidelines 2017 .

In accordance with the Customs (Prohibited Exports) Regulations 1958, on 24 July 2017 the then Minister for Resources and Northern Australia issued a Notification of his intention to consider whether to determine 2018 as a domestic shortfall year.

The Minister for Resources and Northern Australia will consult with producers and other stakeholders such as the Australian Energy Market Operator, the Australian Consumer and Competition Commission and major gas users. The Minister for Resources and Northern Australia is expected to make a decision about whether to make a determination by 1 October 2017.

The ADGSM is targeted and will operate for five years. It will be reviewed in 2020 to consider whether it is meeting its objectives.

The process for implementing the ADGSM is illustrated in the ADGSM Stepped Process.

Enquiries

Enquiries can be directed to Nicole Hinton, Manager, Onshore Gas Section on nicole.hinton@industry.gov.au.

Background

On 27 April 2017 the Government announced the introduction of the ADGSM.

The ADGSM is a critical part of the Government’s comprehensive work program to ensure the energy needs of Australian users are met. It will work alongside other key gas market reforms underway, including the $26m Gas Acceleration Programme (GAP), the Australian Competition and Consumer Commission’s gas market transparency work, and the Peak Supply Guarantee given by gas producers.

The ADGSM will give the Government the power to restrict LNG exports in domestic shortfall years. 

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