The east coast gas cartel

Australia is the second-largest exporter of liquefied natural gas on earth. It exports roughly 80 per cent of everything it produces. And as Queensland and Western Australia built the infrastructure to ship Australian gas to Japan, South Korea, and China, the domestic price of gas on Australia’s east coast tripled.

Not in real terms over a long period. In actual dollar terms per gigajoule, within a few years of LNG exports beginning. Gas that cost about A$3 per gigajoule before the LNG export era tripled to about A$10, and often more, according to the Australia Institute. In the extreme peak of the Ukraine war in 2022, east coast gas prices rose 300 per cent in a single year.

The Australian Competition and Consumer Commission has been conducting a formal inquiry into the east coast gas market since 2017. It publishes regular reports. It holds hearings. It issues findings. And year after year, its own reports describe a market so concentrated, so dominated by a handful of export-focused companies, that IEEFA’s Bruce Robertson wrote publicly in 2018 that the regulator had essentially ‘allowed what was once our gas market to become a cartel.’

01How the concentration happened

The east coast gas market was not always this concentrated. It got that way through a series of mergers and acquisitions that the ACCC approved, or failed to block, over more than a decade.

The critical acquisitions were Shell’s takeover of Arrow Energy in 2010, giving Shell access to vast coal seam gas reserves in Queensland, and Shell’s acquisition of BG Group in 2015. After those two transactions, Shell alone controlled roughly 43 per cent of east coast coal seam gas reserves. The three Queensland LNG export projects, APLNG (Origin/ConocoPhillips), GLNG (Santos), and QGC/QCLNG (Shell), and their joint venture partners together had effective control over close to 90 per cent of east coast reserves.

The ACCC’s own inquiry reports describe the structural features Robertson identifies, without using the word ‘cartel’: concentrated ownership, limited competition, LNG exporters as ‘swing producers’ with discretion over whether uncontracted gas goes to export or domestic market, prices set by international benchmarks rather than domestic cost of production.

Correction, 7 October 2026. The opening of this article said IEEFA’s lead analyst wrote in 2022 that the ACCC had allowed the gas market to become a cartel. The words quoted are Bruce Robertson’s, in an IEEFA opinion piece from 2018, the source this article cites for them. The opening now names him and gives the year as 2018.

02The swing gas problem

The key structural feature of the east coast gas market that produces the domestic pricing crisis is what the ACCC calls ‘swing gas.’

Queensland’s three LNG export projects have long-term contracts to supply specific volumes of LNG to Asian buyers. But those projects also produce gas that is not committed to any contract, known as ‘uncontracted gas.’ The LNG exporters have a choice: export it to the spot market, where Asian prices are high, or sell it into the domestic market, where it would ease prices for Australian households and manufacturers.

The ACCC’s June 2025 report stated the position clearly: ‘The LNG exporters are the only producers with discretion to either export their uncontracted gas, or supply it into the domestic market.’ And it found that the risk of domestic shortfall in 2026 depended entirely on whether ‘Queensland LNG producers export all their uncontracted gas.’

When it is more profitable to export, which it usually is, the gas leaves Australia. When the domestic market is tight, the ACCC issues warnings. The exporters may or may not respond. The domestic market's claim on the gas rests on a Heads of Agreement commitment, recorded in the ACCC's December 2024 interim update, that LNG producers' uncontracted gas be offered to the domestic market first ¹⁰.

Meanwhile, the LNG exporters collectively shifted from being net contributors of gas into the domestic market to net withdrawers in 2023. The ACCC expected this withdrawal to increase in subsequent years.

Correction, 15 October 2026. Two statements in this article went further than their sources. First, this section said the domestic market has no legal claim on uncontracted gas. The ACCC's December 2024 interim update says that under the Heads of Agreement the three east coast LNG producers' uncontracted gas 'must be first offered to the domestic market' before it is offered abroad ¹⁰. The report does not say whether the Heads of Agreement is legally enforceable, and it records that the Government's export-restriction mechanism, the ADGSM, had never been activated. The exporters still hold the discretion the ACCC describes ³. This section and the brief now say that the domestic market's claim rests on that first-offer commitment. Second, the lede, the brief and the key facts put the pre-export price at A$3 to A$4 per gigajoule and the current price at A$8 to A$12. The Australia Institute page cited as reference ⁶ says Australian wholesale prices 'tripled from $3 per gigajoule (GJ) to $10 per GJ, and often rose even higher' ⁶. The lede, brief, key facts, the hero image and the note on reference ⁶ now give the Australia Institute's figures.

03The WA comparison: what a reservation policy looks like

Western Australia has a domestic gas reservation policy. In October 2006 the State Government announced an objective of securing domestic gas commitments up to the equivalent of 15 per cent of LNG production from each export project, negotiated case by case ¹³. The ACCC describes the current policy, in place since 2011, as requiring that 15% of gas produced over each LNG export project’s life is committed for domestic supply ¹⁰. The result: WA domestic gas prices have historically been significantly lower than east coast prices. WA manufacturing has not experienced the same price-driven closures.

As Article 1 of this series documented, the WA reservation policy was imposed despite fierce opposition from the industry and from federal Resources Ministers of both parties. Ian Macfarlane condemned the policy at international oil and gas conferences. Martin Ferguson, Labor’s Resources Minister, opposed it. WA Premier Barnett implemented it anyway. It worked.

The east coast has no equivalent in force. Queensland attaches an Australian Market Supply Condition to some new exploration tenures, which requires gas produced from them to be sold within Australia ¹⁰, but THE RORT found no reservation on east coast LNG production in the ACCC’s December 2024 report or the Government’s 10 September 2026 release. The federal Domestic Gas Reservation Bill 2026, whose Domestic Supply Obligation would start on 1 January 2028 under the announced timetable ¹⁴, was reported as introduced on 14 October 2026 ¹⁵. When Queensland’s LNG export terminals were approved and built from 2015, no domestic reservation was imposed. The east coast was effectively opened to export without protecting the domestic market.

Correction, 19 October 2026. This section said Western Australia’s reservation policy was enacted in 2006 and requires LNG export projects to reserve about 15 per cent of production, and that the east coast has none. The Western Australian Government’s policy of October 2006 sets an objective of securing domestic gas commitments up to the equivalent of 15 per cent of LNG production from each export project, negotiated case by case ¹³; the ACCC dates the current policy, which it describes as requiring that 15% of gas produced over each LNG export project’s life is committed for domestic supply, to 2011 ¹⁰. The ACCC page cited for the 2006 date (reference 11) does not carry it. On the east coast, no reservation on LNG production was found in the ACCC’s December 2024 report ¹⁰, which records only a Queensland condition on some new exploration tenures, or in the Government’s release of 10 September 2026 ¹⁴, which calls the proposed scheme Australia’s first national one; the industry body says the Bill was introduced on 14 October 2026 ¹⁵. The text, the timeline entry, the key fact and the brief now say so.

04The manufacturing casualties

High east coast gas prices are not an abstraction. They have produced a documented wave of manufacturing closures and industrial contractions.

Incitec Pivot, a major producer of explosives and fertilisers, closed its Gibson Island fertiliser plant in Brisbane in 2022, citing the high cost of domestic gas. The plant had operated for more than 50 years. Incitec had previously flagged that domestic gas prices made Australian production uncompetitive against imports.

John Coyne, director of national security programs at the Australian Strategic Policy Institute, wrote in ASPI’s The Strategist that Australia’s gas crunch is ‘a sovereignty issue, not a market quirk’, arguing that the east coast is a fractured system dominated by legacy export contracts and limited transport capacity, with gas in the north and demand in the south but no reliable way to connect them. ⁷

Gas sets the marginal price for electricity in the east coast wholesale market. When gas prices rise, electricity prices follow.

This transmission mechanism means that the concentration in the gas export market flows directly into household power bills, small business energy costs, and the economic viability of energy-intensive Australian industries.

Correction, 8 October 2026. This section said the Australian Strategic Policy Institute described the situation as ‘a sovereignty issue, not a market quirk’, arguing that manufacturers were vulnerable to manipulation by a handful of export-focused companies with no domestic supply obligation. The phrase is the headline of an opinion piece by John Coyne, director of national security programs at ASPI, in ASPI’s The Strategist on 4 August 2025, and The Strategist says opinions in it are the author’s, not ASPI’s. The piece argues about legacy export contracts and limited transport capacity, not manipulation, and the page cited before did not mention Incitec Pivot. The text now says so and cites the original ⁷.

05The ACCC’s limits

The ACCC has conducted its Gas Inquiry since 2017. In that time it has produced dozens of reports, identified the structural problems in the market with increasing clarity, and issued repeated warnings about domestic supply risks.

But, on this outlet’s reading, the ACCC’s powers in the gas market are primarily transparency and monitoring powers. It can report on prices, identify shortfalls, and recommend policy responses. The Treasurer’s 2025 direction under which the ACCC runs the Gas Inquiry tells it to hold a price inquiry into the supply of natural gas, take listed matters into account and give interim reports; THE RORT read the instrument in full on 19 October 2026 and it contains no power to set prices or compel supply. ¹⁶ It also enforces the mandatory Gas Market Code, including the conditions of exemptions that ministers grant from it. ¹² It cannot set domestic gas prices. It cannot reverse the mergers and acquisitions that created the current concentrated market structure.

The government does have intervening powers. The Australian Domestic Gas Security Mechanism (ADGSM), enacted in 2017, allows it to restrict gas exports if a domestic shortfall is declared. But the ADGSM has rarely been triggered and is designed as a last resort, not a market-structuring tool.

The result: the ACCC documents the problem with increasing precision, reports the problem with increasing urgency, and the structural conditions that create the problem remain in place.

The east coast gas market has a continuous ACCC inquiry, years of documented findings, and structural shortfalls projected from 2028. The same companies whose dominance of reserves was documented in the inquiry’s earliest reports are still the only entities with discretion over whether domestic customers receive adequate supply. The regulator monitors. The industry decides. Australians pay.

Correction, 7 October 2026. This section said the ACCC "cannot compel LNG exporters to supply domestic customers". That went further than the sources cited. It now says what they support: on this outlet's reading of the ACCC's reports, the ACCC's powers are limited beyond monitoring and transparency, and under the Gas Market Code supply commitments are volunteered by producers in exchange for exemptions and then enforced by the ACCC. ^{10 12}

Correction, 8 October 2026. The 7 October correction above said that under the Gas Market Code supply commitments are volunteered by producers in exchange for exemptions. The ACCC page cited does not say that. It says the code is mandatory, that the Minister grants conditional exemptions from it, and that the ACCC investigates alleged breaches and monitors and enforces compliance with those conditions. The text now says so ¹².

Correction, 19 October 2026. This section, citing the ACCC’s December 2024 report, said that on this outlet’s reading the ACCC’s enforcement powers in the Gas Inquiry are limited beyond monitoring and transparency. The report does not say that. The paragraph, the reference note and the brief now say what was checked: the Treasurer’s Competition and Consumer (Price Inquiry, Natural Gas) Direction 2025 ¹⁶, read in full, tells the ACCC to hold the inquiry and report, and contains no power to set prices or compel supply. The ACCC’s separate role in enforcing the Gas Market Code ¹² is unchanged.

06The rort within the rort

The domestic pricing crisis is directly connected to everything else this series has documented. It is not a separate problem from the PRRT failure, the donation system, or the revolving door. It is the same problem, showing up in the daily energy costs of Australian households and businesses.

The gas was extracted from Australian territory. The resource belongs to Australians. The companies extracting it paid almost no resource tax. They exported 80 per cent of the gas to Asian buyers. They became the swing producers for the domestic market and routinely chose the more profitable export option. The domestic market tightened. Prices tripled. Manufacturers closed. Households paid higher electricity bills.

And through all of it, the ACCC runs its inquiry. And the PRRT collects less than beer excise.

Correction, 8 October 2026. The fact box in this section said INPEX is majority owned by the Japanese government. No reference note in this article carries that claim, and INPEX’s own shareholder page (inpex.com/english/ir/shareholder/stock.html, opened 8 October 2026, figures as of 30 June 2026) lists the Minister of Economy, Trade and Industry as the largest holder of common shares at 23.81 per cent, and as the holder of the one special class share, with no majority holder. The fact box now calls INPEX a Japanese company and no more.

If it’s a rort, we cover it.