Offshore Petroleum and Greenhouse Gas Storage Amendment (Domestic Reserve) Bill 2026 explained

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Offshore Petroleum and Greenhouse Gas Storage Amendment (Domestic Reserve) Bill 2026 explained

The Offshore Petroleum and Greenhouse Gas Storage Amendment (Domestic Reserve) Bill 2026 is a private Senator's bill introduced by Senator Pauline Hanson on 10 March 2026. It would amend the Offshore Petroleum and Greenhouse Gas Storage Act 2006 to require petroleum production licensees to enter into a domestic reserve agreement with the Commonwealth. In practical terms, the bill would compel companies that extract gas from Australian offshore fields to reserve a portion of that gas for sale to Australian customers — rather than exporting the entire volume — as a condition of their production licence. The bill is currently before the Senate with no second reading debate held as at 17 July 2026. No proposed amendments have been circulated.

This is a federal system guide. State constitutions, parliaments and local-government laws can allocate comparable functions differently.

The useful question is not only “what is the rule?” but also “who administers it, which document controls it, and when might it change?” That distinction prevents an accurate general explanation from becoming wrong advice in a particular election, chamber or policy setting.

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What the bill proposes

The bill amends the Offshore Petroleum and Greenhouse Gas Storage Act 2006 — the Commonwealth legislation governing offshore petroleum exploration and production — by inserting a requirement that petroleum production licensees must enter into a domestic reserve agreement with the Commonwealth.

The bill summary states that the agreement would require producers to set aside a portion of gas produced from their offshore fields for supply to the Australian domestic market. This mechanism — often called a 'domestic gas reservation' policy — is designed to ensure that Australian households and businesses have access to competitively priced gas.

Australia is one of the world's largest LNG exporters, with major production facilities in Western Australia, the Northern Territory, and Queensland. However, the eastern states have experienced domestic gas price spikes and supply tightness, creating political pressure for reservation policies that prioritise Australian consumers over export markets.

The bill does not specify the percentage of gas to be reserved, the price terms under which reserved gas would be sold, or the duration of reserve agreements. These details would likely be determined through negotiation between producers and the Commonwealth, or set by regulations made under the amended Act.

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Who is affected

The bill would directly affect holders of petroleum production licences in Commonwealth offshore waters — primarily the large LNG projects off the coast of Western Australia and the Northern Territory, such as the North West Shelf, Gorgon, Wheatstone, Pluto, Ichthys and Prelude facilities. These projects extract gas from offshore fields, process it, and export the vast majority as LNG.

Under the bill, these companies would need to negotiate and enter into domestic reserve agreements with the Commonwealth specifying a portion of output to be made available for Australian buyers. The bill could also affect future offshore gas projects in the planning pipeline, creating an additional regulatory hurdle for new developments.

Australian gas consumers — including manufacturers, electricity generators, and households — could benefit from increased domestic gas availability and potentially lower prices. Energy-intensive manufacturers, such as those in the chemicals, aluminium and building materials sectors, have been particularly vocal about the impact of high gas prices on their competitiveness.

International buyers of Australian LNG — principally in Japan, China, South Korea and other Asian markets — could face reduced supply if reservation reduces export volumes. Australia's LNG customers have long-term supply contracts, and any reservation policy would need to navigate the potential conflict with existing contractual obligations.

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Current status and progress

The bill was introduced in the Senate on 10 March 2026, with the first reading and second reading moved on the same day. As at 17 July 2026, no second reading debate has been held.

The bill is a private Senator's bill — introduced by an individual Senator rather than by the government — and as such it does not have guaranteed parliamentary time for debate. No committee inquiry has been established and no proposed amendments have been circulated.

The bill's progress depends on Senator Hanson securing time for debate, either through the Senate's procedures for private Senators' bills or through negotiation with the government and other parties. Private Senators' bills from non-government and non-opposition Senators face a particularly difficult path to passage.

For the bill to become law, it must pass the Senate and then the House of Representatives, and receive Royal Assent. Both chambers would need to support the legislation, and the government's position — which has not been publicly stated — would be decisive.

Evidence review

The domestic gas reservation debate in Australia

The concept of reserving a portion of Australian gas for domestic use has been debated for over a decade. Western Australia has operated a domestic gas reservation policy since 2006, which requires LNG project proponents to make the equivalent of 15 per cent of their production available to the WA domestic market. The policy is credited with keeping WA gas prices lower than those on the east coast.

At the Commonwealth level, the Australian Domestic Gas Security Mechanism (ADGSM) was introduced in 2017 and gives the resources minister power to restrict LNG exports when a domestic shortfall is forecast. The ADGSM is a reactive mechanism: it is triggered only when the Australian Competition and Consumer Commission and the Australian Energy Market Operator forecast a shortfall.

Senator Hanson's bill would go further than the ADGSM by imposing a proactive, standing reservation obligation on all offshore petroleum production licensees. Rather than waiting for a shortfall to be forecast, the bill would require reservation as a standing condition of holding a production licence.

The policy debate involves balancing several competing interests: the economic benefits of LNG exports (which generated approximately $90 billion in export revenue in 2022-23), the energy needs of Australian households and businesses, the investment certainty required by LNG project proponents, and Australia's obligations under international trade agreements.

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Interaction with existing regulation

The bill would add a new obligation to the existing regulatory framework under the Offshore Petroleum and Greenhouse Gas Storage Act 2006. The Act already regulates the lifecycle of offshore petroleum operations, from exploration permits through to production licences and decommissioning.

The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) and the National Offshore Petroleum Titles Administrator (NOPTA) administer different aspects of the regime. The bill would insert the domestic reserve agreement requirement into this framework, meaning compliance would become a condition of holding a production licence.

Existing production licensees would likely need to negotiate and enter into agreements within a transitional period after the legislation commenced. The interaction between a standing reservation obligation and the existing ADGSM would need to be addressed — the ADGSM is contained in separate regulations under the Customs Act 1901 and the Offshore Petroleum and Greenhouse Gas Storage Act.

A practical question is whether a domestic reserve obligation would conflict with existing long-term LNG supply contracts between Australian producers and international buyers. Most Australian LNG is sold under 15-20 year contracts, and diverting gas from those contracts to the domestic market could raise complex legal and diplomatic issues.

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What happens next

The immediate challenge for the bill is securing time for second reading debate in the Senate. Private Senators' bills compete for limited debating time, and the government and opposition control the Senate's legislative schedule.

If debate proceeds, the bill could be referred to a committee — likely the Senate Economics Legislation Committee — for inquiry, which would give stakeholders including gas producers, manufacturers, energy market bodies and state governments the opportunity to make submissions.

The bill would also likely be considered by the Senate Standing Committee for the Scrutiny of Bills, which examines bills for impacts on personal rights and parliamentary propriety. The committee may also consider the bill's interaction with Australia's international trade obligations.

If the bill passes the Senate, it would proceed to the House of Representatives, where its prospects would depend on the government's position. The government has existing mechanisms — the ADGSM and the Gas Market Code — to address domestic gas supply, and has not indicated support for a standing reservation policy. Observers should monitor the Senate Notice Paper for any scheduled debate on the bill.

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