China doesn’t need Aussie gas. So, stop exporting it.


Australia is the world’s biggest LNG exporter at the same time as East Coast domestic gas supplies are experiencing an acute shortage and East Coast gas prices have soared to nosebleed levels:

International and Australian gas prices

Currently, East Coast living standards are going backwards because, unlike in Western Australia, there is no reservation of gas for domestic use.

71% of eastern gas exports went to China in 2021-22:

Gas exports

Both Chinese state-owned enterprises, CNOOC and Sinopec, are equity partners in two of three LNG export facilities, making them card-carrying members of the east coast gas export cartel.

Every single household and business east of Western Australia is now subsidising the foreign-owned, tax-free, China-beholden gas cartel to the tune of billions in annualised energy costs. In turn, Australian gas is effectively subsidising Chinese industry and its war machine, while Australian households and businesses are ruthlessly squeezed with higher costs.


As a result, Australian inflation will be driven higher, which will prompt more aggressive rate hikes from the Reserve Bank of Australia (RBA).

China typically pays less than Australian users of that same gas on the East Coast (see chart above). And China is so flush with supply, in part because it is receiving low-cost gas from sanctioned Russia, that it is now on selling imported gas to Europe for profit:

China, the world’s largest buyer of LNG, is reselling the super-chilled fuel to Europe and Asia as an economic slowdown and a boost in Russian gas supplies have created surplus inventories.

Chinese gas imports

Chinese energy companies have reportedly resold Russian gas to Europe. Russian LNG and pipeline imports to China are on the rise. China purchased 2.35 million tons (Mt) of LNG in the first six months of the year from Russia, a 28.7% increase compared to the same period last year, according to a South China Morning Post report…

Amid slow demand and a mild winter, and prior to Russia’s invasion of Ukraine, China Petroleum & Chemical Corp, aka Sinopec, issued a tender in January to sell 45 LNG cargoes between February and October.

PetroChina Co. has sold several cargoes this year, and China National Offshore Oil Corp. is offering to sell an Australian North West Shelf cargo for November, Bloomberg recently reported…


The federal government is not regulating the gas cartel in part because it is worried about upsetting China and derailing Labor’s “reset”. But China does not even need the gas and is reselling it to our allies in Europe at fat markups.

The solution to this farce is for the Albanese Government to do to gas exactly what the Chinese Government did to urea: impose East Coast reservation to ensure a plentiful and low-cost supply of gas to domestic household and industrial users. Even better, combine domestic reservation with super profits taxes, thereby ensuring Australians share in the humongous war profits being earned by selling our resources.

Gross operating profits

Sadly for Australians, the Albanese Government is full of policy cowards. It would rather cozy up to the foreign-owned energy cartel and the CCP than govern in the interests of Australians.

In doing so, it will starve itself of much-needed budget revenue as well as drive up domestic energy costs, reducing Australian’s real disposable income, destroying our industrial base, and forcing the RBA to fight harder against inflation by hiking interest rates.

About the author
Leith van Onselen is Chief Economist at the MB Fund and MB Super. He is also a co-founder of MacroBusiness. Leith has previously worked at the Australian Treasury, Victorian Treasury and Goldman Sachs.