WA State Policy
WA’s gas market is isolated with no cross-border infrastructure. The market is small in comparison to the international liquefied natural gas (LNG) markets, with LNG producers having control over 97% of the state’s gas reserve.
Over 60% of Australia’s recoverable and conventional gas reserves are in WA, located in the Carnarvon and Perth basins. These gas field’s purpose is to support the state’s LNG domestic and export needs.
Notably, the gas in the state’s pipeline network is not for export.
The WA Domestic Gas Policy
“The WA Government’s Domestic Gas Policy aims to secure WA’s long-term energy needs and ongoing economic development by ensuring that LNG exports also make gas available to the domestic market.”
While the State Government applies the policy in a flexible manner, LNG projects must comply and actively demonstrate their ability to meet the policy conditions to attain project approval.
The policy stipulates that LNG projects must commit to making domestic gas available, with three possible methods:
“Reserving domestic gas equivalent to 15% of LNG production form each LNG export project;
Developing and obtaining access to the necessary infrastructure (including a domestic gas plant, associated facilities and offshore pipelines) to meet their commitments;
Showing diligence and good faith in marketing gas to existing and prospective consumers.”
Prices and contracts for domestic gas projects will be determined by the market, and any unsold gas must be reserved and made available in support of the state.
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Policy Development & Application
The Domestic Gas Policy was officially formalised in 2006 and has been re-developed most recently in 2012 and 2020.
“The policy has been given effect through domestic gas agreements struck with LNG project developers.”
“Closer integration between domestic and export gas markets in WA and on the East Coast is affecting local gas supply.”
The WA Government’s aim is to preserve the integrity of the states’ policy as well as the local gas market, therefore, several clarifications have been made on the application of the policy.
Policy Implementation
The Department of Jobs, Tourism, Science and Innovation implements the policy on behalf of the Minister for State Development, Jobs and Trade.
Implementation involves:
Updating the policy and application- to be in line with the LNG industry development;
Negotiating contractual agreements with exporters;
Monitoring the compliance of the agreement’s implementation;
Keeping the market updated.
There are currently seven domestic gas agreements.