The Australian government first proposed the reserve scheme in May, citing fears of severe gas shortages across the east coast. Regulators previously warned that the region could face a supply deficit by December. Under the latest iteration of the policy, producers would be required to set aside up to 20% of their output for local consumers starting in 2028.

Shell contends the mandate ignores the complexities of the global energy landscape, particularly as the market deals with a 20% supply drop linked to QatarEnergy’s force majeure. Beyond the volume requirements, the company objects to the specific stipulation that producers must supply 110% of east coast demand. Wake warned that forcing these volumes into the domestic market rather than allowing them to be offered competitively will distort pricing and ultimately sow the seeds of future market failure.