Victorian Minister for Energy and Resources, Lily D’Ambrosio, has put forward a rule change request that would see a three-year extension to the Declared Wholesale Gas Market (DWGM) interim LNG storage measures.
The current interim measures – effective from 15 December 2022 – allow AEMO to act as buyer and supplier of last resort of uncontracted storage capacity at the Dandenong LNG (DLNG) facility under the National Gas Rules.
In a rule change request submitted to the Australian Energy Market Commission (AEMC) on 3 April 2025, Ms D’Ambrosio said these measures are fit for purpose and ensure sufficient LNG inventory can be held for reliability purposes over a period of tightening supply and reduced system resilience, particularly reduced redundancy at the key Longford production plant.
The current arrangements also provide market participants with certainty about how AEMO will establish, maintain and use its LNG reserve while ensuring market participants are not crowded out, D’Ambrosio said.
Ms D’Ambrosio’s proposed rule changes also include new elements which are focused on providing AEMO and the market with improved operational visibility of the liquefaction services that allow for the DLNG facility to be refilled.
These changes will assist AEMO in better fulfilling its declared system security functions in the Victorian Declared Wholesale Market, Ms D’Ambrosio said.
The broader east coast gas reform program, including Stage 2 Reliability and Supply Adequacy reforms, and the potential expansion of AEMO powers as announced by Energy Ministers on 6 December 2024, will likely provide a longer-term solution for managing the Dandenong LNG reserve.
However, Ms D’Ambrosio said these arrangements will not be developed or implemented in time to fill this storage for the immediate upcoming winters.
“DLNG plays a critical role in the Victorian Declared Transmission System, and it is important that it can continue to be fully used, especially in this context of growing risks to reliability of supply,” she said.
“As both AEMO and the Australian Competition and Consumer Commission (ACCC) have flagged, maximising all available storage, including shallow LNG storage, will be a key factor in maintaining reliable supply to end consumers.”
The proposed rule change aims to provide a simple and readily implementable solution that will contribute to the National Gas Objective by improving system security and reliability, allow for the more efficient operation of the market and help mitigate the risk of major supply disruptions and associated costs including to the broader economy.
Ms D’Ambrosio said while the proposal is for amendments to the National Gas Rules, it is also expected to contribute to the National Electricity Objective, noting the increasing interconnectedness of the gas and electricity markets.
The proposal also aligns with the Victorian Government’s emission reduction targets and its Gas Substitution Roadmap, which sets out the strategic pathways and actions that will help decarbonise the gas sector.
Ms D’Ambrosio said the roadmap recognises that this process will take time and there is a need to ensure secure and reliable supply for Victorian households and industry while the transition is still underway.
“This rule change request supports this transition by maximising the use of existing assets, and reducing the risk of future asset stranding. It also ensures that gas production that is already occurring can be stored for use when it is most needed.”
