Major Australian LNG producers and investors are reportedly exploring a significant policy compromise as they seek to influence the federal government's proposed domestic gas reservation scheme.

According to industry sources cited in the article, a growing number of companies are discussing the possibility of accepting revisions to petroleum taxation arrangements, an area that has traditionally been highly sensitive for the sector.

The proposal would effectively involve a trade-off in which gas producers accept less favourable tax settings if the government agrees to soften or modify aspects of its planned gas reservation policy.

The domestic gas reservation proposal has become a major issue for the energy industry, with producers concerned about potential impacts on export projects, investment decisions and future profitability.

At the same time, the government is under pressure to improve domestic gas availability and address concerns about energy security, manufacturing competitiveness and energy prices.

The discussions highlighted in the report suggest that some industry participants now view tax concessions as a preferable outcome compared with stricter gas reservation requirements.

The fact that companies are considering changes to petroleum tax rules demonstrates the level of concern within the sector regarding the government's policy direction.

The article indicates that negotiations and policy debates are continuing, with both government and industry weighing options that could balance domestic energy needs with the interests of gas exporters and investors.

No final agreement has been reached, but the reported discussions reflect the increasing urgency surrounding Australia's gas market and energy policy settings.