The Federal Government has completed the design of the Mandatory Gas Code of Conduct (Gas Code), following close engagement with gas users and producers.
The Gas Code will ensure Australian gas is available for Australian users at reasonable prices, give producers the certainty they need to invest in supply, and ensure LNG producers meet their export commitments.
Producers have already offered indicative domestic supply commitments under the new framework of at least 260 PJ to 2027. These indicative commitments will reduce the risk of shortfalls as assessed by the ACCC and AEMO.
The final design of the Gas Code places a greater emphasis on:
- Securing additional domestic supply commitments in the short term to anchor prices at $12/GJ and shield east coast gas consumers from volatile international gas prices.
- Facilitating certainty for investment in new supply to avoid projected shortfalls and sustain reasonable domestic gas prices over the medium term.
The full Gas Code will be released in coming weeks once legal drafting has been completed and the Federal Executive Council has ratified the instrument.
It will ensure domestic prices are reasonable by establishing a price anchor, a mechanism to drag prices down – through the combination of:
- A price cap, which is to be set at $12/GJ (with a review commencing by 1 July 2025);
- A process for qualifying for exemptions from the price cap on the basis of making satisfactory ACCC and court enforceable supply commitments to the domestic market; and
- Allowing small producers of gas to be exempt from the price cap if they supply only the domestic market.
