The domestic-export tug of war: future of Curtis Island LNG

The Australian government’s review of East Coast gas policy comes at a pivotal moment, as the region faces tightening supply, volatile prices and rising competition between domestic needs and export commitments. This paper explores the extremes of what is possible in the East Coast gas market through four scenarios for liquefied natural gas (LNG) exports from Curtis Island in Queensland, which alone represents around 70% of market demand. The scenarios – Indecisive, Orderly Transition, Domestic First and Abundance – illustrate alternative pathways for balancing supply, exports and affordability. Each scenario demonstrates difficult trade-offs: stabilising prices often comes at the expense of export revenues, while prioritising exports can undermine domestic supply security. Among these, the Orderly Transition scenario presents the most balanced outcome, with a phased reduction in LNG exports helping to moderate domestic prices without triggering severe economic dislocation. However, achieving this scenario would require unprecedented coordination among policymakers, producers and investors, and may ironically be the most challenging to implement. In contrast, the Domestic First scenario could deliver short-term relief for consumers but at an estimated economic cost of over A1 billion annually in lost royalties, investment and regional activity. The analysis underscores that a return to historically low gas prices is unlikely under any scenario. Instead, a decisive and forward-looking policy that incentivises the development of new supply sources and infrastructure investment will be crucial in securing affordable and reliable domestic gas in the years ahead.