What the APLNG Extension Actually Delivers
Let’s start with the deal itself. In March 2025, the Albanese Government announced a four-year extension to its domestic gas supply deal with Australia Pacific LNG (APLNG).
This will see up to 10 petajoules (PJ) of gas made available each year to the domestic market until 2029. According to a press release from the Department of Climate Change, Energy, the Environment and Water, it states that commercial and industrial users, not households, will get first access to this gas at a capped price of $12 per gigajoule (GJ), indexed to the consumer price index (CPI).
It’s also enforceable under the Gas Code of Conduct and monitored by the ACCC, giving the agreement some regulatory teeth.
This extension forms part of a broader policy effort that, according to the government, has already secured 644PJ of domestic gas since 2023. It’s being pitched as a win for businesses needing supply certainty in a high-volatility market.
A capped price — but not a guarantee
While the $12/GJ ceiling provides temporary relief, CPI indexing means the real cost of gas may still rise over time. And while large industrial users are the priority, not every business will benefit equally, especially those without secured supply contracts or negotiating power.
What the APLNG Deal Doesn’t Solve
There’s always a ‘but’, isn’t there? Well, in this instance, there are a few.
While the APLNG extension may offer some welcome breathing room, it does little to address the deeper structural challenges facing Australia’s gas market. Short-term certainty is valuable, but without long-term reform, it risks creating a false sense of stability.
Anyone reading about this deal should also remember that the timing of this announcement, released about 5 weeks before the federal election, isn’t down to chance.
Structural supply issues remain
The Australian Energy Market Operator (AEMO) and ACCC have both flagged a likely shortfall in domestic gas supply by the end of the decade, particularly across the east coast.
The existing pipeline network is ageing, new gas fields are increasingly costly to bring online, and community opposition to new projects is slowing development timelines.
Add to that our ongoing reliance on exports — where international buyers are often willing to pay more — and it becomes clear that domestic users will continue to face competition for supply in future, regardless of government intervention.
Volatility hasn’t disappeared — it’s paused
The APLNG deal may cap pricing in the near term, but CPI indexing ensures the ceiling will rise over time. The inclusion of CPI indexing in the deal isn’t shocking in itself, as all prices are subject to inflation. But if inflation takes off, gas price increases will follow.
You may be reading this and wondering whether $12 per gigajoule is actually a good deal or not. The answer is that it’s failry mid-range in today’s market, depending on the size of your business. During the height of global volatility in 2022 and 2023, gas prices surged well above $30/GJ in some instances. In that context, $12 looks like a win.
But for larger commercial users — especially those with strong negotiating power or long-term contracts already in place — $12 isn’t necessarily a bargain. It’s slightly above what many were paying pre-2022.
Basically, this deal isn’t going to give businesses an absolute bargain on their gas bills. Its main aim is to provide a shield against any serious price hikes in the next four years.
What Businesses Should Be Doing Now
The APLNG extension offers some more than welcome gas price relief for businesses in the short term. But that doesn’t mean businesses should now put their energy planning on the back burner until 2029.
When markets are volatile, contract options dry up and costs become harder to control. Right now, conditions are more favourable: pricing is capped, supply is more predictable, and energy providers are more willing to engage.
That makes this the perfect time for businesses — particularly gas-reliant sectors like manufacturing, hospitality, and food production — to review their existing contracts, reassess energy needs, and explore commercial energy procurement strategies.
Locking in certainty now can help avoid being caught out when the next round of price hikes inevitably arrives. For some, that might mean seeking longer-term gas supply agreements. For others, it could mean diversifying energy sources or investing in energy efficiency upgrades to reduce exposure.
Secure Your Business’s Gas Future
The APLNG extension is good for businesses. There’s no denying that. But there’s still a lot of work to be done to secure your business’s gas future.
Demand will continue to increase year on year over the next four years and export markets will remain an enticing source of profit for gas companies. Those factors have the potential to turn 2029, when this deal runs out, into a bit of a shock for the domestic gas market.
If you want to make use of this window while it’s still open, chat to the team at Choice Energy for a free energy assessment today.
