Australia’s cabotage rules effectively preclude using Queensland gas to fill the southern states’ gas shortfall with LNG

Natural gas remains a critical industrial feedstock, fuel and source of energy, as recognised in the Australian Government’s Gas Market Review Report of December 2025. However, as the Gippsland Basin offshore Victoria is depleted, supply of gas in southern Australia is forecast to be well short of anticipated demand. Some have proposed filling this gap by shipping liquefied natural gas (LNG) from Queensland to the southern states. But this proposal overlooks Australia’s rules on interstate transport, known as cabotage. Those rules try to maximise the use of Australian owned ships by giving them exclusive access to general licences to operate interstate. The last of the Australian-owned LNG carriers was sold in 2024. While foreign ships can operate interstate through a licence, under the Coastal Trading (Revitalising Australian Shipping) Act (2012), it is valid for one year only and includes conditions that shipments of LNG for power stations would have difficulty fulfilling. Unless these rules are changed, any LNG imports needed to help avoid expected shortfalls in southern state natural gas supply may be more likely to be filled by cargoes from the USA or Qatar than from Queensland.