Govt takes first step to limit gas exports

The federal government has formally notified gas companies it will consider the likelihood of a supply shortfall in 2018, the first step to limiting exports.

Resources Minister Matt Canavan. Source: AAP

The federal government is using new rules to put gas companies on notice about a possible domestic supply shortfall in 2018.

The move is the first step towards limiting gas exports.

Resources Minister Matt Canavan has formally told gas companies he will consider whether 2018 will be a "shortfall year".

The new Australian domestic gas security mechanism, which came into effect on July 1, gives the government power to order gas companies to limit their exports or find other sources of new gas if it believes there won't be enough to meet forecast needs.

Senator Canavan said the mechanism was a last-resort measure to be applied in accordance with international trade obligations.

It would only be used if there was not sufficient supply for Australian consumers, he said.

In the longer term, the federal government hopes to work with the states and gas producers to open up more reserves to supply both domestic and export markets.