Federal Government Policy
Ensuring a secure supply of gas to meet Australia’s net zero commitments is a key policy of the Federal Government. Gas is still needed to replace coal in power generation in backing up renewables, but also as feedstock for industrial use as there are no commercially viable alternatives.
Future Gas Strategy
The Federal Government's Future Gas Strategy, released in June 2024 and led by the Department of Industry, Science and Resources, sets out Australia’s approach to balancing gas supply and demand as part of the country's transition to net zero by 2050. Developed through consultation with industry stakeholders, including the DomGas Alliance, the strategy is focused on decarbonising the economy, safeguarding energy security and affordability, maintaining Australia’s position as a prime energy investment destination, and supporting international trade partners on their net zero pathways.
Western Australia (WA) , which supplies 60% of Australia’s LNG exports, plays a critical role in this strategy. The strategy recognises WA's reliance on gas for its mining, minerals processing, and industrial sectors and highlights gas as essential to supporting renewable energy growth. Gas will firm renewable power as WA phases out coal-fired power stations by 2030, with a goal to replace coal-fired generation with gas by 2029, ensuring grid stability during the energy transition.
A key outcome of the Future Gas Strategy is the review of retention lease guidelines under the "use it or lose it" policy. This review ensures that gas fields are developed as soon as possible, preventing warehousing of resources and securing sufficient supply to meet future demand during the transition period.
The strategy also prioritises ongoing investment in new gas supply projects and the optimisation of existing resources. Carbon capture and storage (CCS) initiatives, including the Gorgon LNG Project and future CCS hubs, are integral to reducing emissions from gas production, helping Australia meet its climate commitments.
Highlighting the importance of gas to Australia’s future, Minister Catherine King stated:
"Ensuring Australia continues to have adequate access to reasonably priced gas will be key to delivering an 82 per cent renewable energy grid by 2030, and to achieve our commitment to net zero emissions by 2050."
Through these measures, the Future Gas Strategy ensures that WA will maintain a secure and flexible domestic gas supply, while contributing to the global transition towards a low-emissions future.
“Use It Or Lose It” Approach
The WA Government is pushing for more Federal Government direction of LNG investment off the WA coast under a “use it or lose it” approach.
The retention lease system has been criticised for allowing big LNG players to sit on gas reserves that others could develop earlier. The renewal of each lease is normally considered every five years by industry regulator the National Offshore Petroleum Titles Administrator. If a lease is likely to be commercially viable within 15 years, it can be retained for a further five years. If operators did not have credible plans to use gas from a lease, it could be returned to the market.
Importantly, the Retention Lease title was not meant to allow large LNG producers to sit on the gas reserves until a future time when their existing fields get depleted.
Specifically, the Alliance believes the “use it or lose it” provisions attached to Retention Leases must be upheld to allow other producers to access and develop resources where existing leaseholders have been inactive. This would enable Australia to capitalise on the significant economic and environmental opportunities to boost LNG exports, support the global transition to cleaner fuel sources, while also securing domestic energy supplies. Importantly, the increased production of LNG under the scheme would significantly bolster domestic gas reserves, helping to negate future shortfalls in the domestic market.