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Australia's new government will extend the so-called domestic gas security mechanism until 2030 in a bid to ensure adequate gas supplies for the domestic market.
Argus reports that the mechanism, which was first introduced in 2017, was about to expire next year, but the Labor government that won the last elections would extend it even though it said the tool had some shortcomings.
The mechanism gives the Australian government the right to divert LNG from three offshore projects in Eastern Australia from the foreign to the domestic market to make sure it is well supplied.
"Australia remains a long-term and reliable supplier of resources and energy, and is a crucial supplier of LNG to our trading partners in north Asia," resources minister Madeleine King said, as quoted by Argus. "We remain committed to contributing to global energy security and working with international partners to address current global challenges."
Australia is currently struggling with a gas and electricity crisis resulting from a colder than usual winter and tighter global LNG supplies that have led to a surge in demand for Australian exports.
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In addition, Quartz noted in a recent report that Australia has a shortage of regasification units, which have gone to Europe as it seeks to wean itself off Russian oil and gas, mostly betting in increased LNG imports, for which it needs to regasification facilities since it is short of LNG import terminals.
The country suffered a gas shortage back in 2017 as well, as it began producing LNG for foreign markets, which led to a surge in demand for gas from abroad. This, in turn, led to a deficit for the commodity at home.
It was as a result of that shortage in 2017 that the Australian domestic gas security mechanism was introduced in a bid to tackle the crisis.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com