“The Economics and Industry Standing Committee report into the domestic gas policy released today highlights potential future shortfalls of gas but leaves it to the Government to find a solution by negotiating with industry.
The Committee recommendation that the 15% offshore reservation policy be retained is one that I support, as does most of the state. The Committee rightly claimed credit for getting better outcomes in this regard, which is welcomed.
The question on whether onshore gas producers will be given access to the LNG export market so that they can achieve higher prices for their product is now firmly a decision of the State Labor Government.
The Committee recommended that “the State Government allow onshore gas projects to export LNG only if the domestic market is adequately supplied and is expected to be well supplied for a period of time” but have left the Government to define those parameters.
In this regard the Premier started bullish on allowing onshore gas producers the opportunity to export last year, but he has backpedalled significantly this year.
This would seem to indicate that change is unlikely, and I expect no action from the Government on the issue before the next state election in March next year.
The outcome to date therefore is that as we wait for Government policy there will simply be more uncertainty for an industry that needs long term certainty.
At least by tabling their report today the Committee has ensured a Government response should be delivered before the end of the year. This does not however ensure Government action or provide certainty for either gas producers or domestic gas users.
It is essential that those industries that use gas in Western Australia can access adequate supplies. This underpins thousands of jobs.
If the Government decides to change the current policy of banning nearly all onshore gas producers in WA from accessing the export market, it must be certain domestic gas supplies will be adequate, but neither the Committee nor the Government have quantified “adequate”.
The Government would also have to ensure there is transparency for the Parliament and the public when businesses claim they need to export to achieve their business case and financial investment. Given the lack of transparency generally displayed by the Government, it will not be sufficient to keep the business cases secret and ask us to take them on trust.
The level of disclosure will be critical to any decision going forward.
