PERTH (miningweekly.com) – The federal government has completed the design of the Mandatory Gas Code of Conduct (Gas Code), placing emphasis on securing additional domestic supply in the short term, and facilitating certainty for investment in new supply.

In a statement on Thursday, the federal government noted that producers have already offered indicative domestic supply commitments under the new framework of at least 260 PJ to 2027. These indicative commitments will reduce the risk of shortfalls as assessed by the Australian Competition and Consumer Commission (ACCC) and the Australian Energy Market Operator (AEMO).

To ensure that domestic prices are "reasonable" government has established a price anchor, or cap, set at A$12/GJ, with a review starting by July 2025.

Resources Minister Madeleine King said that the price cap provided a level of certainty to both gas consumers and to producers.

“And they need to have certainty for further investment. And that all combines to make sure we have greater supply, but also with that price anchor. So, we're not so susceptible to fluctuating gas prices, which we have seen remarkably over the last 12 months, but for how long?” she told ABC News on Thursday.

The government will implement a process for qualifying for exemptions from the price cap on the basis of making satisfactory ACCC and court enforceable supply commitments to the domestic market, while allowing small producers of gas to be exempt from the price cap if they supply only the domestic market.

The Gas Code will require all participants to abide by standards of conduct to level the playing field in contract negotiations between users and producers and deliver a better functioning, more competitive gas market.

The full Gas Code will be released in coming weeks once legal drafting has been completed and the Federal Executive Council has ratified the instrument.

King said on Thursday that the review planned for the middle of 2025 was "sensible".

“We've said for the middle of 2025 to review the price cap itself, but also the whole of the code. And that's to make sure it's fit for purpose. Because what we know is that there's extreme volatility in the international gas market and it's simply the sensible thing to do to bake in that review so that we can assess it at the time. And obviously the ACCC and our AEMO, ourselves as Ministers and our departments will keep a watchful eye over this because we want the regulation we introduced to be fit for purpose, and I am really pleased with the engagement the gas industry has participated in and they are supportive of us enacting this,” she said.

The government on Thursday said that the Gas Code was supported by a strong enforcement regime delivered by the ACCC, with a review to be undertaken no later than two years after coming into effect, to ensure the Gas Code remains effective and fit for purpose.

“The government took immediate action to shield Australian gas users from skyrocketing prices by temporarily capping the price of gas in December 2023. Coupled with price caps on coal for power generators, the government’s actions nearly halved wholesale energy prices,” the federal government said in a joint statement.

“The Gas Code will deliver Australian gas at reasonable prices for Australian families and industry and provide certainty for our valued trading partners.”