Natural Gas Liquids in Australia: 2025 Trends, Policy & Investment Insights

Natural gas liquids (NGLs) rarely make headlines, but behind the scenes, they’re driving Australia’s energy exports, supporting manufacturing, and offering new opportunities as the world pivots toward cleaner fuels. In 2025, with policy shifts and international demand evolving, NGLs are more relevant than ever. Whether you’re an investor, business owner, or curious about the energy transition, understanding NGLs is key to navigating the Australian economy’s next chapter.

What Are Natural Gas Liquids—and Why Should Australians Care?

NGLs are hydrocarbon compounds—like ethane, propane, butane, isobutane, and natural gasoline—extracted alongside methane in natural gas production. They’re used in:

• Petrochemical manufacturing (plastics, detergents, synthetic rubber)
• Transport fuels (LPG for vehicles and heating)
• Power generation and blending for export LNG

Australia is a global heavyweight in LNG exports, but NGLs are an increasingly valuable byproduct. In 2024–25, the Australian Energy Regulator projects NGL output to rise thanks to new field developments and increased processing capacity in Queensland and Western Australia. This comes as Asian demand for propane and butane surges, particularly from Japan, South Korea, and China, where NGLs are seen as a bridge fuel in the move away from coal.

2025 Policy Shifts: New Incentives and Regulatory Scrutiny

This year, energy policy is moving fast. The federal government’s Future Gas Strategy (released May 2025) has set the tone for the next decade. Key points for NGLs include:

• Export Encouragement: The government continues to support NGL and LNG exports as a pillar of national revenue, while tightening emissions rules for new projects.
• Emissions Reductions: Facilities processing NGLs must now meet stricter emissions baselines under the Safeguard Mechanism, with new carbon capture incentives available for projects that can demonstrate net reductions.
• Domestic Market Security: Reforms to the Australian Domestic Gas Security Mechanism (ADGSM) require producers to guarantee minimum NGL and LPG supplies for Australian users before exporting excess volumes.

This policy mix creates both opportunities and compliance challenges. For example, Santos and Origin Energy—major players in the Cooper and Surat basins—are investing in carbon capture at their NGL facilities to maintain export approvals and access new government subsidies.

Investment, Demand, and the Global Picture

The economics of NGLs are changing quickly. In 2025:

• Propane and butane prices have risen 12% year-on-year due to tight global supply and strong Asian demand.
• Australia’s NGL exports are forecast to exceed 8 million tonnes, with Japan and China as top buyers.
• Domestic LPG prices remain volatile, but new price caps are protecting households from spikes seen in late 2024.

For investors, the growth of NGL infrastructure—pipelines, fractionation plants, storage—means opportunities in listed energy companies and infrastructure trusts. For example, APA Group’s recent expansion of its Moomba processing hub is driven by NGL demand, while smaller firms like Beach Energy are ramping up NGL extraction to diversify revenues beyond conventional gas.

Manufacturers and agribusinesses are also watching closely: lower-cost domestic NGLs could help insulate Australian industry from global price shocks as geopolitical tensions continue to roil the energy markets.

Real-World Impact: Case Studies and Industry Trends

Consider the new $1.3 billion NGL project in Western Australia’s North West Shelf, which is set to deliver both export-grade propane and a stable supply of LPG for domestic users. This aligns with the government’s new push for regional job creation and value-adding in the resources sector. Meanwhile, the Queensland government’s 2025 Clean Energy Roadmap includes grants for agribusinesses converting to LPG-powered machinery, further driving local demand for NGLs.

With global energy demand still growing and Australia’s geographic proximity to Asia, NGLs are positioned to support both the economy and the transition to lower-carbon fuels—provided policy, investment, and sustainability measures stay aligned.