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The Domestic Gas Alliance says Western Australia must demonstrate that its domestic gas market is well supplied and affordable before it can make a credible case for exclusion from the proposed national Domestic Gas Reservation Scheme.
Responding to ongoing calls from industry stakeholders, including an open letter from Hancock Energy and Strike Energy urging Western Australia to be excluded from the national scheme, Domestic Gas Alliance spokesperson Mia Davies said the Alliance supported investment in new gas production and recognised the importance of regulatory certainty.
"Western Australia's domestic gas reservation policy has underpinned almost two decades of industrial development and investment. WA industries that use domestic gas support $432.2 billion in economic activity and more than 460,000 jobs, equivalent to 52.1 per cent of total economic activity in Western Australia.[1]
That value is generated across mining, manufacturing, mineral processing, utilities, construction and transport, industries that use domestic gas to keep operations running, process WA resources and turn them into higher-value products.
“However, a 2023-24 Parliamentary Inquiry found the Domestic Gas Policy was no longer fit for purpose, with WA LNG producers delivering just 8 percent against the intended 15 percent. DomGas Alliance analysis shows that Woodside’s Pluto has delivered only 3.7 per cent.”
"AEMO forecasts potential domestic gas supply shortfalls from 2028, with widening deficits from 2030. That makes it difficult to argue that Western Australia's market is assured of sufficient supply, both now and into the future.
"If gas producers want WA excluded from the national scheme, the onus is on them to demonstrate they are delivering sufficient gas to keep the domestic market well supplied at affordable prices.
"Equally, the WA Government has a responsibility to demonstrate that it is administering, monitoring and enforcing the existing State policy."
Ms Davies said that for WA to make a credible case for exclusion from the national scheme, gas producers and the State Government must first demonstrate how they will address forecast supply shortfalls and ensure the domestic market remains well supplied and affordable into the future.
She said there were a number of factors that are critical in achieving this outcome:
1. Delivery of Pluto's domestic gas obligations
Woodside and the WA Government must conclude negotiations to strengthen and enforce the Pluto domestic gas commitment, addressing the historical shortfall against the equivalent of the State's 15 percent reservation benchmark.
2. Waitsia's return to domestic supply
Waitsia must transition to supplying all remaining production to the WA domestic market from 1 January 2029, consistent with its original agreement. The existing LNG export permission must expire on 31 December 2028, without extension.
3. No extension of onshore gas exports beyond 2030
The WA Government must rule out extending the current arrangements permitting eligible new onshore gas projects to export up to 20 percent of production until 31 December 2030. From 1 January 2031, those projects must reserve 100 percent of production for the domestic market.
4. Timely development of Belisama and West Erregulla
The progress of the Belisama and West Erregulla projects would ensure new domestic gas supply is available before the forecast shortfalls emerge. Any export permissions must remain subject to the existing 2030 deadline.
5. Independent evidence of a well-supplied market
AEMO's WA Gas Statement of Opportunities and the WA Government's annual Domestic Gas Statement must provide credible, consistent evidence that sufficient gas will be available to meet domestic demand through the 2030s, with previously forecast supply shortfalls addressed.
"These are practical measures that would give the Commonwealth, gas producers and domestic consumers greater confidence that Western Australia's existing policy can deliver the outcomes it was designed to achieve," Ms Davies said.
"We want to see new projects proceed. We want to see investment in exploration and production, and we recognise that producers need certainty to commit significant capital.
"But investment certainty is a two-way street. Western Australian manufacturers and industrial businesses also need confidence they can secure reliable gas supplies at commercially workable prices to support their own investment decisions.
"Hancock and Strike are seeking 15 years of certainty that additional Commonwealth reservation obligations will not apply to WA. Domestic gas consumers are entitled to ask what corresponding certainty they will receive that the market will remain adequately supplied over that same period.
"The Alliance has consistently supported recognition of WA's existing policy within the national framework. But that recognition is conditional on evidence that the policy is delivering as intended for Western Australians. The Domestic Gas Reservation Bills as drafted provide the flexibility for WA’s Domestic Supply Obligation to be set at zero for multiple years if the WA market is sufficiently supplied. The DomGas Alliance supports the Bills being passed as proposed.”
"Producers and the WA Government have an opportunity to make a compelling case for WA's exclusion from the national scheme, but that case must be built on demonstrated delivery and independently verified evidence of future supply security.
"Ultimately, a gas reservation policy that doesn't deliver gas is like a pub with no beer - and nobody wants that."
[1] ACIL Allen analysis for 2024-25: Reports & Submissions - DomGas Alliance
