Australia's liquefied natural gas (LNG) export sector, the world's second-largest, faces a complex interplay of domestic energy security concerns, expanding project developments, and intense political debate over taxation. The core tension stems from the competition for feed gas between lucrative export contracts and growing domestic demand, particularly on the east coast where shortages are forecast.

Domestic Market Pressures and Policy Responses

With over 80% of its natural gas production currently exported, Australia's domestic market is increasingly strained. Forecasts indicate the southeast state of Victoria will become a net gas importer by 2029. In response, the federal government has proposed a scheme requiring east coast LNG exporters to reserve 15-25% of their production for domestic use. Furthermore, geopolitical events, including damage to Qatari LNG facilities and the Middle East conflict, have intensified global demand for Australian LNG and driven up prices, amplifying domestic calls for government intervention to shield consumers.

Major LNG Projects and Feed Gas Developments

Substantial investments are underway to secure feed gas for existing and new LNG facilities. Key projects include:

• Shell's Crux field, a $2.5 billion development to backfill the Prelude FLNG vessel, targeting production start-up by 2027.
• Chevron's projects for Gorgon LNG, including the delayed Jansz-Io compression project and the newly sanctioned $2 billion Gorgon Stage 3 tie-back, aiming for production in 2028.
• Santos's Barossa LNG project, which shipped its first cargo in early 2026, and Woodside's Scarborough project, targeting start-up in late 2026.
• Woodside's Browse LNG, a future project in pre-FEED stage with potential start-up in the 2030s, though it faces environmental legal challenges.

Additionally, Inpex has farmed into shale gas acreage in the Beetaloo basin, potentially supporting a future third train at its Ichthys LNG project if resources are proven.

Taxation Debate and Industry Pushback

A significant political campaign advocates for higher taxes on LNG exports, arguing the current Petroleum Resource Rent Tax (PRRT) is insufficient. Reports highlight that in 2023, Australia collected far less revenue from LNG exports than Qatar did from equivalent volumes. Proposals from groups like the Australia Institute and the Australian Council of Trade Unions call for a 25% tax on gas exports, which they claim could raise tens of billions more annually.

The industry strongly opposes these measures. Representatives warn that higher or windfall taxes would deter investment, undermine energy security during a global supply crisis, and damage Australia's reputation as a reliable supplier. They contend the industry is already a major taxpayer and that effective tax rates could reach 80-90% under the proposed changes, crippling competitiveness.