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Australian gas companies slipped on Thursday after the government said it will introduce a policy to restrict liquid natural gas exports when there is a domestic supply shortage to keep gas prices low at home.

Prime Minister Malcolm Turnbull said a shortage in domestic gas supplies had created “dramatically higher” prices in Australia which were above the prices paid in the country’s export markets. Export restrictions will ensure the home market has adequate supply before permitting outbound shipments, Mr Turnbull said.

He added:

It is unacceptable for Australia to become the world’s largest exporter of liquefied natural gas, but not have enough domestic supply for Australian households and businesses.

Mr Turnbull told ABC radio on Thursday that despite the country being a “massive gas producer” the east coast market had been short of gas with further shortages forecast putting 65,000 jobs at risk.

He added:

So we’re taking this decisive action today and what this will mean is that if there is a shortage of gas for the domestic market forecast then export controls will be imposed so that Australian families and Australian businesses and Australian jobs come first.

Earlier this month the Australian Competition and Consumer Commission began a three year inquiry to monitor the the wholesale gas market in Eastern Australia to increase transparency of supply arrangements.

Mr Turnbull said the Minister for Natural Resources will use information from the ACCC to impose controls on exports if there is a forecast for a gas shortage in the domestic market.

Oil and gas producer Santos, which claims to have one largest exploration areas in Australia, said it would “supply more gas into the Australian domestic market that it purchases for its share of LNG exports”, adding that it would seek clarification of how the policy would work in practice.

Origin Energy, a gas supplier saw its shares fall as much as 4.8 per cent easing to be down 4.5 per cent at A$7.195 a share. Santos tumbled as much as 7.7 per cent easing to be down 5.4 per cent at A$3.445 per share. The benchmark S&P/ASX 200 was up 0.1 per cent.

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