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An alliance of Western Australia's largest gas users has called on the Australian Government to guarantee the state will be ‘no worse off’ under a National Domestic Gas Reservation Scheme.
In a submission on the draft scheme, the DomGas Alliance has also urged for the immediate establishment of Western Australian stakeholder workshops to inform the design of the national scheme.
The workshops would ensure the transition doesn't erode WA's existing protections or diminish the state's supply certainty under a national scheme.
The DomGas Alliance has said the proposed national scheme must accommodate the WA gas market which was substantively different to the east coast and had operated with a reservation policy for 20 years.
The national scheme is being developed at a time when Western Australia's own reservation policy is under increasing scrutiny from major gas users, with concerns about implementation, compliance and enforcement affecting its ability to consistently deliver the policy's objectives.
A 2024 WA Parliamentary Enquiry found that LNG producers have delivered only 8 percent of supply against a 15 percent target, falling well short of expectations. Performance has been even weaker at the project level, with Woodside's Pluto project delivering 3.4 percent, according to DomGas Alliance modelling.
The DomGas Alliance submission identifies the critical differences between the WA Policy and the national scheme, including:
Reservation commitments 15 vs 20 percent: The WA Policy requires LNG exporters to make domestic gas available by reserving gas equivalent to 15 percent of LNG exports for the WA market. The national scheme will reserve 20 percent of LNG exports (measured in joules of thermal energy) which represents a significantly higher reservation target relative to the WA Policy. It is our understanding that the 20 percent figure was reached through an analysis of the east coast market.
Obligation to offer vs obligation to supply: depending on the national scheme’s final design, an obligation to supply (as required under the national scheme) versus an offer of supply (as required under the WA Policy) would be an improvement on the existing WA Policy settings for gas consumers.
Obligation to supply over lifetime of project vs year on year: the WA Policy measures the DSO on a life-of-project basis. While theoretically sound, this approach has created perverse outcomes for reliability of domestic gas supply. Under the national scheme it is proposed that each year creates a discrete compliance obligation. Compared to WA Policy settings, this could enable downstream industries and domestic buyers to rely on consistent annual domestic gas availability, improving investment planning and competitiveness
Compliance & enforcement: the WA Policy contains limited enforcement mechanisms whereas the national scheme contemplates legislative enforcement mechanisms, mandatory compliance plans, performance reporting and explicit non-compliance remedies.
The submission also highlights matters specific to the existing WA market that must be accommodated or addressed by a national scheme, including how to deal with existing agreements between the State Government and producers, existing reporting mechanisms in WA, our onshore gas policy and legacy issues like the under delivery of gas from Woodside’s Pluto project.
Any transition to a national scheme must protect Western Australia by:
Ensuring domestic gas supply does not decline from current or reasonably projected levels
Safeguarding price competitiveness for WA consumers and industry
Maintaining or improving supply certainty through any transition period
existing contractual obligations of WA-based producers to domestic purchases are respected and protected.
Attributable to DomGas Alliance Spokesperson Mia Davies:
"Western Australia has almost two decades of experience with domestic gas reservation. We know what has worked, but we also know where the policy has fallen short.
"The effectiveness of a policy should be judged by its outcomes, not simply by its existence or level of public support.
“We've learnt valuable lessons about policy design, implementation, compliance and enforcement in WA that should inform the national framework.
"To complicate matters, it's still unclear how the national scheme will operate in Western Australia, how it will interact with the existing WA Policy, or what happens to existing contractual arrangements.
"We cannot afford for Western Australia to be an afterthought in a national scheme.
"You can't simply overlay a national framework on top of an existing State policy and expect it to work. Our gas market is fundamentally different to the east coast and it’s clear that’s been the basis for the development of the framework to date.
“How the Commonwealth intends to deal with WA is critical - that's why we're calling for dedicated Western Australian stakeholder workshops to work through the key policy differences, understand how it will be implemented and to ensure Western Australian consumers and industry are no worse off."
