On 16 October 2026, we published our draft decision to grant Australian Gas Networks Limited (AGN) exemptions from gas ring-fencing obligations in sections 139 and 140 of the National Gas Law (NGL) in relation to its Hydrogen Park South Australia (HyP SA) and Hydrogen Park Gladstone (HyP Gladstone) hydrogen trial projects. 

In making our draft decision, we assessed AGN’s exemption application for both trial projects and responses to our requests for information against the exemption criteria in rule 34 of the National Gas Rules (NGR). In summary, we consider that:

• The trial projects are not a significant part of either the relevant pipeline systems.
• For both projects, the costs of compliance with sections 139 and 140 of the NGL would outweigh the public benefit of compliance.
• AGN has established internal controls that substantially replicate the relevant associate contract controls.

Our draft decision was also guided by the National Gas Objective. The AER considers that the absence of current competition reduces the immediate competition concerns that ring-fencing obligations are intended to address. 

We propose that the exemptions commence on 30 November 2026, when the trial projects’ existing deemed exemptions under Part 2 of Schedule 7 to the NGR expire, and remain in effect until 30 November 2031. The five-year period balances regulatory certainty with the ability to reconsider the exemptions as the renewable gas market develops. 

The proposed exemptions would require AGN to notify the AER within 15 business days of:

• a material change in the nature or scale of either project
• a formal third-party request for connection or access to the Gladstone or Tonsley distribution networks for a renewable gas production facility
• any material change to the internal controls relied on for HyP SA or HyP Gladstone, including controls that substantially replicate the associate contract requirements, and provide updated documentation of those controls.

These proposed conditions supplement AGN’s notification obligations under rule 34(6) of the NGR and would keep the AER informed of relevant material changes.

We will consider the matters raised in written submissions before making the final decision, which is expected by 30 November 2026.