A small parcel of CSG-rich Queensland has been set aside to produce gas for Australia only.

Queensland Mines Minister Dr Anthony Lynham said the 58 square kilometres in the Surat Basin will be used to produce gas that cannot be exported, but must be sold in Australia.

The land will go to tender in February for gas exploration.

“There are predicted gas shortages on the Australian seaboard,” Dr Lynham said.

“And this has been the focus of regulators and [the] industry is concerned. We're releasing this pilot project in a highly prospective area, the Surat Basin, which is already producing gas for export.”

Queensland Resources Council chief Ian Macfarlane welcomed the move.

“Queensland again has to lead the way, and the resources industry is prepared to be a part of it to ensure that we can make gas available to domestic customers,” he said.

Mr Macfarlane said Victoria and New South Wales should increase their supplies too, especially with a forthcoming “price increase in gas”.

“In the end a price will secure the gas. And at the moment what we see in the longer projections is that supply squeeze will force the gas price up,” Mr Macfarlane said.

Queensland Opposition Leader Tim Nicholls wants the gas kept for Queensland specifically.

“Why should we be supplying the rest of Australia? Why should we be picking up for the faults in New South Wales and Victoria who refuse even to explore for gas?” Mr Nicholls said.

“That gas should be made available for Queensland businesses, it should be used to make sure we have enough energy up here to run our businesses.”