Federal Government Policy
Protecting Western Australia’s competitive advantage is a key issue for the near future.
2021-22 Federal Budget
The Federal Budget for 2021-22 promises an increase in investments to unlock gas sources and reduce prices. This is a result of the Government maintaining its commitment to a gas-fired recovery following the Covid-19 pandemic.
The Federal Government used the Budget to announce it will deliver more gas to where its demands lie at a competitive price, to grow the country’s industry and support local jobs.
Upstream Barriers to Entry and Competition/Liquidity and Transparency of Wholesale Market
Smaller producers have no avenue at present to get their gas to market, therefore the creation of a spot market to encourage short term trading should be investigated. Opportunities for common use gas gathering and processing infrastructure to reduce development costs and facilitate domestic gas developments need to be identified. Done together, this could help create a healthier and more efficient market and drive more small gas operators and discoveries off shore.
“Use It Or Lose It” Approach
The Federal Government is pushing for more 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.
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.