Beach Energy has raised concerns that Labor’s proposed gas reservation scheme could negatively impact Australia’s oil production and investor confidence, particularly in the country’s key southern gas-producing regions. Brett Woods, chief executive of the company, told a parliamentary hearing on Friday that the policy, which mandates LNG exporters to reserve a portion of their gas for domestic consumers, risks displacing existing suppliers and reducing investment in new gas developments.

Woods warned that the policy could threaten Australia’s supply of liquid hydrocarbons, such as petrol and diesel, which are produced alongside gas in southern fields. “It is the southern market gas that delivers oil for diesel, jet fuel, barbecues, LPGs,” he said, distinguishing these from Queensland’s gas fields, which primarily produce dry gas with few associated liquids.

The government’s proposed gas reservation scheme aims to address potential domestic supply shortages and lower local prices by requiring LNG exporters to sell a share of their production within Australia. Beach Energy, which supplies about 20 percent of the east coast’s domestic gas market, currently sells all its eastern Australian gas to local households, manufacturers, and power generators, with no exports.

Woods highlighted that since the proposal’s announcement, Beach’s share price has declined roughly one-third—equating to approximately $700 million in lost market value—reflecting investor uncertainty around the government’s intervention. He argued that the policy’s oversupply mechanism could enable exporters to capture a larger portion of domestic demand, reducing volumes available to existing domestic producers.

Using a hypothetical market model, Beach illustrated that requiring a 10 percent oversupply could increase total supply from 400 petajoules (PJ) to 440 PJ, forcing exporters to supply 240 PJ instead of 200 PJ. This shift, the company said, would reduce domestic producers’ sales from 200 PJ to 160 PJ, limiting their revenue and ability to invest in new drilling projects—thereby threatening future supply and undermining energy security objectives.

Woods referenced recent exploration activities in the Cooper Basin, where Beach’s joint venture drilled 67 wells and discovered five new gas fields last year, as an example of the investment necessary to maintain production levels. He also cited economic modeling by Coral Economics that projected Australia’s gross domestic product could be $416 million lower by 2028 under a 20 percent gas reservation policy compared to scenarios without reservation.

To mitigate these risks, Beach proposed several changes to the legislation: setting the default oversupply requirement at zero, increasing it to 10 percent only when justified by regulatory evidence; removing mandatory selling provisions that could compel producers to accept uneconomic prices; and recognizing investments that add new gas to the market.

While supporting measures that address genuine supply risks, Woods emphasized that policies should avoid undermining existing producers. “Oversupply is not energy security,” he concluded.