Article by Brad Thompson, courtesy of The Australian.
23.06.2025
Resources Minister Madeleine King has reassured domestic gas users that they will be protected from any supply and pricing fallout in the wake of Iran’s threat to block the Strait of Hormuz.
While most the focus has been on oil prices, the Albanese government is meeting east coast LNG exporters this week as part of scheduled talks about domestic supply.
Major LNG exporters Qatar and United Arab Emirates rely on passage through the Strait of Hormuz to supply about 27 per cent of all imports to Asia and about 8.5 per cent of all imports to Europe.
Rystad Energy and other LNG market analysts have warned of the potential for unsustainable price spikes if the shipping route is blocked.
Ms King said the Australian market was more resilient and able to withstand shocks than it was three years ago when Russia’s invasion of Ukraine disrupted global LNG supply and pricing.
The Albanese government was forced to intervene and take drastic action in 2022 when producer offers of domestic supply hit $70 a gigajoule. The government eventually introduced a $12 a gigajoule price cap for domestic sales, but that is due to expire.
Ms King said Iran’s threat to block the narrow waterway and its 3km-wide shipping channel was a major concern but should not alarm domestic gas users, given the government’s capacity to intervene on supply and pricing.
“Exports of LNG from Qatar and UAE depend upon the Strait of Hormuz being navigable,” Ms King said. “Any disruption to trade in the Strait would have an impact on the global economy.”
The government, represented by new Assistant Minister for Resources Anthony Chisholm, is holding heads of agreement meetings on domestic supply with east coast LNG exporters.
The meetings are held every quarter and under changes made to the Australian Domestic Gas Security Mechanism since 2022, the government can nationalise supply if it deems the domestic commitment is too low.
The concerns about global LNG supply come as the government embarks on a review of the ADGSM, the heads of agreement (HoA) regime and the Gas Market Code to make sure they’re delivering as intended.
During the federal election campaign, the Australian Competition & Consumer Commission forecast a potential shortage in the southern market during winter.
East coast LNG exporters stepped up with an extra 9 petajoules of supply options that remain unsold.
Ms King said the planned review of the market controls was even more timely, based on the events in the Middle East. “Our domestic gas market is now much more resilient and able to withstand disruption than it was three years ago when Russia’s illegal invasion of Ukraine disrupted global LNG supplies,” she said.
“Since coming into government in June 2022, we have reformed the ADGSM and the HoA and introduced a code of conduct and price cap. There is more to do, and the gas market review is timely in the circumstances.”
Ms King joined other ministers in backing the US bombing of Iran’s nuclear facilities.
