Squadron Energy has welcomed the Federal Government’s introduction of a gas reservation scheme from 1 July 2027, requiring 20 per cent of gas exports to be reserved for domestic use, but says the final design will determine whether it delivers in practice.
Squadron Energy CEO Rob Wheals said the scheme must address how gas is delivered to customers in southern markets while ensuing delivery pathways are the lowest-cost possible.
“To ensure the scheme delivers cheaper gas to customers in NSW and Victoria, government must ensure reserved gas can be delivered where demand is strongest and provide clear signals to customers on access,” Mr Wheals said.
“Existing pipelines are already at capacity during peak demand, with no material new pipeline capacity expected until at least 2030; without this, there is a real risk reserved gas remains stranded in Queensland when southern customers need it most.”
Mr Wheals said there are three critical design tests for the scheme:
- Ensure real supply from day one
The full 20% of new and uncontracted gas must be made available from 1 July 2027, not phased in or back-ended.
- Guarantee delivery to southern markets
Reservation will not lower prices in southern markets unless gas can physically reach customers in NSW and Victoria during peak demand, so delivery pathways must be addressed as part of the final design.
- Provide clear access signals to the market
Government should provide clarity to customers on how and when reserved gas will be delivered, so customers have the confidence to enter into long-term supply agreements.
Mr Wheals said Squadron’s Port Kembla Energy Terminal (PKET) is well positioned to support delivery into southern markets.
“In 2027, the system will need additional capacity to move gas south during peak demand periods,” Mr Wheals said.
“Port Kembla is the only regasification terminal built in Australia and can be brought into the market from 2027.
“With very limited capacity to move material volumes of additional gas south through existing pipelines at peak times, flexible delivery infrastructure will be critical to making the reservation scheme work.”
Port Kembla Energy Terminal is built, an FSRU is secured under long-term charter, and an operator has been appointed to manage the onshore facilities.
Jemena has completed the reversal of the Eastern Gas Pipeline to enable supply to Melbourne as well as Sydney.
The terminal is connected to the Eastern Gas Pipeline via a 12-kilometre pipeline and is capable of covering up to 70 per cent of eastern gas market demand and peak consumption periods.