East coast natural gas producers in Australia have intensified informal discussions with major manufacturers this week, seeking innovative pathways to address industrial concerns over high energy costs while circumventing the federal government’s proposed gas reservation scheme.
The talks represent a strategic effort by suppliers to head off the forced oversupply mechanism embedded in the draft policy, which industry stakeholders argue could distort market dynamics and undermine long-term supply security.
The reservation scheme, designed to guarantee affordable gas for domestic users, has faced sharp criticism from energy companies who warn that mandatory supply allocations could lead to inefficiencies and reduced investment incentives.
By engaging directly with buyers, producers aim to develop voluntary arrangements that satisfy affordability goals without triggering the regulatory intervention that would mandate specific output levels.
This approach allows companies to maintain pricing discipline while addressing the immediate needs of energy-intensive industries.
Santos chief executive Kevin Gallagher has previously rejected calls for below-cost gas supplies, stating that such demands would breach fiduciary duties to shareholders.