As at July 2026, Australia’s energy sector is not moving through a simple replacement of fossil fuels with renewables. It is operating two systems at once: rapidly expanding renewable generation and storage, while continuing to rely on gas, LNG, liquid fuels and established infrastructure for industrial demand, export earnings and system reliability.

For industry professionals, the key change is not the disappearance of oil and gas, but the changing role, regulation and performance expectations placed on the sector. AEMO’s latest planning continues to identify renewable energy, storage, upgraded networks and gas-powered backup as interconnected parts of Australia’s future energy system.

The Australian Government has announced a domestic gas reservation scheme scheduled to commence on 1 July 2027. Entities intending to export LNG will be required to supply the Australian market with gas equivalent to 20 per cent of their annual export volumes.

Consultation on the draft design framework closed on 30 June 2026, with the government now refining the framework and drafting legislation.

This is a significant market intervention. It is intended to improve domestic supply security and contracting transparency, but producers, pipeline operators, manufacturers and energy retailers are closely examining how the final design may affect investment, pricing and long-term supply agreements.

The practical question will be whether the final scheme encourages additional production or primarily reallocates existing supply.

AEMO’s 2026 Gas Statement of Opportunities reports improved gas adequacy through 2029 due to increased supply capability, infrastructure investment and lower demand forecasts.

However, production from legacy southern fields is forecast to decline by 46 per cent over the next five years. New supply, storage and transport investment will be required from 2030 under most weather conditions.

Infrastructure is therefore becoming as important as resource availability. APA has committed $260 million to Stage 3A of its East Coast Gas Grid expansion. The project is expected to increase north-to-south capacity by 11 per cent, including a 20 per cent increase in northern gas transport capacity into Victoria, by winter 2028.

Investment remains active across Australia’s producing regions.

Santos shipped the first LNG cargo from the Barossa project through Darwin LNG in January 2026. Woodside’s Scarborough Energy Project is more than 96 per cent complete, excluding Pluto Train 1 modifications, and is targeting its first LNG cargo in the fourth quarter of 2026.

In Queensland, Senex says its Atlas and Roma North developments are on track to contribute approximately 60 petajoules per year to the east coast market. Both developments are undergoing capacity expansion, supporting manufacturers, energy retailers and industrial users across eastern Australia.

These developments demonstrate that new supply is continuing. However, projects are increasingly assessed against domestic commitments, emissions intensity, community expectations, approval risk and infrastructure access—not production volume alone.

AEMO’s 2026 Integrated System Plan confirms that the least-cost pathway for the National Electricity Market remains renewables connected by transmission, firmed by storage and backed by gas.

As coal generation retires, gas-powered generation is expected to operate less continuously but become more important during peak demand, renewable shortfalls and prolonged periods of low wind or solar generation.

This creates a different operating model: potentially lower annual utilisation, but higher expectations for rapid response, plant reliability, pipeline flexibility and workforce readiness.

The 2026–27 Safeguard Mechanism Review will examine baseline decline rates, scheme coverage, credits, onsite abatement and arrangements for trade-exposed facilities. Consultation on aspects of the review is already underway, with policy positions and potential draft amendments expected in early 2027.

At the same time, offshore decommissioning activity is increasing as mature assets reach late life. New government guidance has clarified when offshore property must be removed and the limited circumstances in which infrastructure may be considered for retention at sea.

For operators and contractors, this means growing demand for capability in emissions management, carbon capture and storage, well integrity, plugging and abandonment, marine logistics and environmental compliance.

The sector needs workers who can move safely between traditional operations, transition projects and emerging decommissioning work. Technical competence must be supported by current well-control knowledge, site induction, safety-critical training and nationally recognised qualifications.

Regional workforce pressure, contractor capacity, competency assurance and access to practical training are already being identified as strategic issues for Queensland’s changing energy sector.

Organisations should review workforce capability before project demand peaks—not after shortages appear. AWCC supports industry through IWCF well control training, the Industry Safety Induction and oil and gas drilling qualifications.

Australia’s energy transition is accelerating, but it is also becoming more operationally complex. The organisations best positioned for the next phase will be those that understand the policy direction, maintain investment discipline and build a workforce capable of performing safely across the full energy lifecycle.

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