This week Australia’s government unveiled a proposed plan to limit the export of liquefied natural gas due to domestic price increases brought about by local shortages. This proposal was the result of two meetings between Australian Prime Minster Malcolm Turnbull, producers and the Australian Energy Market Operator discussing natural gas shortages. The plan known as the Australian Domestic Gas Security Mechanism is intended to ensure adequate supplies of natural gas are available in Australia and that gas is therefore affordable and reflects global export prices. lng terminal spain

In a statement published Tuesday, Prime Minster Turnbull commented on the seeming contradiction in the Australian market saying: “It is unacceptable for Australia to become the world’s largest exporter of liquefied natural gas but not have enough domestic supply for Australian houses and businesses,”. The proposed plan would give Australia’s resources minister the power to impose controls on liquefied natural gas (LNG) companies. The controls would be based on advice offered by the Market Operator Regulator and would place regulations on exporters.

Turnbull statement continued saying “If an exporter is not a net contributor to the domestic market- that is, they draw more from the market than they put in they will be required to outline how they will fill the shortfall of domestic gas as part of their overall production and exports,”. These common sense regulations come at a time when Australia is in the seemingly contradictory position of simultaneously becoming the world’s top exporter of liquefied natural gas while facing shortages in Eastern Australia.

These regulations have become necessary as some producers appear to be prioritizing fulfilling export contracts over supplying domestic needs. Gladstone LNG, an east coast liquefied natural gas plant operated by Australia’s Santos Ltd, has been drawing gas out of the domestic market in order to help meet its export contracts. Such actions have been met with domestic outrage as shortages have caused blackouts in recent weeks.

Alternatively, other companies such as Origin Energy and the French company Engie SA have made deals which will ensure gas supplies to power plants at peak times which will hopefully prevent future blackouts. The rise in liquefied natural gas prices has been a persistent headache for the Liberal National government. Domestic outrage has raged at the idea of becoming the world’s largest exporter of LNG while facing shortages. Businesses have stated that unless steps are taken they could face bankruptcy and pressured the government to take action.

Australia has seen an economic boom in recent decades with the rise in domestic mining and utilization of it vast wealth of natural resources. The exportation of these resources has driven the Australian economy to new heights in recent years and further investment in the countries coal, natural gas and other infrastructure projects have created jobs and wealth in formerly impoverished areas of the country. However, this growth has not been without hiccups and as this latest disturbance indicates the country is still wrestling to come to grips with its position as a vital supplier of resources to much of east Asia.