Oliver Peterson: This long-standing gas reservation policy is under pressure, with the LNG producers pushing for the state to be exempt from a proposed national scheme.
But the Domestic Gas Alliance says that WA needs to prove its existing system is actually delivering enough affordable gas for local industry before it can make that case. Mia Davies, the former Nationals MP is a spokesperson for the Domestic Gas Alliance, and she joins us now. Hi, Mia.
Mia Davies: Hi, Ollie. How are you going?
Oliver Peterson: I'm good, Mia. Tell us, is WA actually delivering enough affordable gas for the local industry?
Mia Davies: Well, the indicators and how we measure a well-supplied market would say not. We had a parliamentary inquiry in 2024 that said our policy was no longer fit for purpose, and that the scheme had delivered less than 8% of the 15% benchmark, which is the target that we have in Western Australia. And we have the AEMO, which is the body that does the forecasting to look at what the market will look like into the future, also forecasting shortages. So it's hard to argue that we should be excluded from a scheme on the basis that we have a policy when the policy isn't actually delivering the gas. And the reason it's important for the gas to be delivered is one. The producers have an obligation. That was the deal they signed up to. But two, it's important that West Australians and Australians benefit from these non-renewable resources, and they underpin the businesses that create the local jobs, our manufacturing industry, critical minerals, in all of the things that we see that drive our economy, having that domestic gas available is so important, and we're not convinced that the current WA policy is actually delivering. So we're saying that the federal scheme essentially has a mechanism in it that allows Western Australia to be exempt, but that we should have a pretty rigorous test before we get that box ticked and move on to the status quo.
Oliver Peterson: So why isn't it delivering the outcomes though it was designed to achieve? That is our own domestic gas reservation policy here in WA.
Mia Davies: There's a number of reasons, the policy was designed to be very flexible, and so the obligations can be delivered over the lifetime of a project, which means you you are never guaranteed as the businesses that are seeking to purchase the gas as to when that might arrive.
There's been some changes to the policy, and there's also varying agreements as time has gone on. The agreements have different requirements in them. So some of them are a volume of gas to be delivered, some of them have a percentage, others of them have commerciality clauses that say, well, if it's not commercial for you to deliver the gas, you don't have to do that. But there's no public test, and we don't know what that test looks like. So there's a lot of ways that producers are given flexibility not to deliver the gas, and that causes some challenges. I would say that some projects stack up less than others, and the Domestic Gas Alliance has followed Woodside's Pluto project very closely because, on our count, less than 4% of their 15%.
Oliver Peterson: So why has that happened? What needs to change?
Mia Davies: Well, the state government has acknowledged that that needs to change as as a result of the domestic gas inquiry held back in 2024. It was identified that that agreement needed to be modernized. We're now two years on from those recommendations being accepted by the state government, and we haven't seen an outcome. The government says they are working towards resolving that issue, but there's nothing to stop Woodside from recognizing that they have and can play a role in making sure that our market is well supplied and would therefore meet the federal tests.
So the onus really comes back to the state government to enforce and make sure that there's compliance with these agreements, but that the producers who have these obligations are delivering the gas, so that when the national reservation scheme comes in, they can tick the box and say no problem.
Oliver Peterson: Well, the market operator I see is forecasting potential domestic gas shortfalls from 2028. So deficits also widening from 2030. Mia, how serious is the risk, and what happens if we don't get a new supply online in time?
Mia Davies: Well, it's very serious. If you look at, so I can give you some numbers. We did some analysis earlier in the year. The domestic gas that is purchased and delivered into Western Australia, in 2024 it underpinned 430 billion dollars in economic activity. Now those numbers sort of are a bit mind-boggling, but it's over half of the economic activity in Western Australia, and it contributes towards 460,000 jobs here in WA. So those molecules of gas that are being delivered are underpinning that amount of economic activity and that many jobs. So getting the settings right is really critical, and we know that the people of Western Australia understand this. When we poll to find out what they think about the domestic gas policy and whether they support it, over 80% of people. I mean, it's a no-brainer, right? We should benefit from our own resource, and we're not saying that the producers shouldn't be exporting. It's set up so that they can invest with security, but the obligation is that they must deliver into our market to underpin these businesses that generate and support our manufacturing and industrial base.
Oliver Peterson: The gas producers argue that greater regulatory certainty is essential to attract investment - could imposing additional reservation obligations actually discourage the investment that WA needs to secure future supply.
Mia Davies: Look, we're saying that under the legislation that the federal government has introduced, there is an opportunity for Western Australia to be excluded. And when you're excluded, you aren't adding any additional regulatory burden, you are literally moving back and operating under the current West Australian policy. But before you get that tick, what we're saying is that there should be an independent test and a demonstration of a well-supplied market. So that forecast you talked about that needs to show no deficits. That's your marker, and there's ways of achieving that.
We understand that there’s producers making the argument they need investment certainty. On the flip side, our West Australian manufacturers and our industrial businesses need confidence that they're going to have a secure, reliable gas supply at an affordable price, and at the moment, our policy is not delivering that.
Oliver Peterson: All right, Mia. Before I let you go, what needs to happen now in the next couple of years for you to confidently say that WA has enough gas at affordable prices and can justify an exemption from this national scheme.
Mia Davies: We need to see the delivery of Pluto's domestic gas obligations. So, you know, 3.4, less than 4% out of 15% is a fail mark on anyone's book. We need to make sure that all of our domestic gas suppliers currently existing in the market return to 100% domestic supply because there's some exemptions that have been provided, and we need to make sure that we see the timely development of new onshore and supply into the West Australian market. So we think there's an opportunity to achieve that. It requires the WA government and also producers that have existing obligations to step up to the plate and prove that we have a well-supplied market - the ball’s in their court.
Oliver Peterson: Mia, have a good weekend. Appreciate your time.
Mia Davies: You too Ollie, thanks so much.
