Santos has issued a stark warning against the Australian federal government’s proposed domestic gas reservation scheme, arguing the policy will trigger energy shortages and inflate costs for critical industrial users.
The company contends that the current framework is insufficiently flexible and fails to account for forward-looking supply dynamics, creating a risk of artificial scarcity in the market.
The producer’s opposition highlights a deepening rift between energy companies and policymakers over how to balance domestic security with commercial viability.
Santos specifically flagged that electricity generators, manufacturers, and the rapidly expanding data centre sector could face severe cost pressures if the mandate is implemented without significant adjustments.
This stance follows the company’s earlier formal urging of the government to deny competing producers exemptions from the scheme, marking a sharp escalation in industry tensions ahead of the policy's launch.
The debate underscores the broader challenge of managing Australia’s energy transition while maintaining competitive industrial costs.
Santos chief executive Kevin Gallagher has previously rejected calls from manufacturers for below-cost natural gas supplies, stating that board directors would breach their fiduciary duties by agreeing to such terms. The company maintains that market-based mechanisms, rather than rigid reservation quotas, are better suited to ensure reliable supply without distorting price signals.