Hawker Britton Occasional Papers and Media

Western Australia Domestic Gas Reservation Policy

October 2006

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The Western Australian Government has released its domestic gas reservation policy. Premier Alan Carpenter stated his Government’s commitment to securing the State’s long-term energy needs by ensuring adequate access to domestic gas supplies. 

The policy release follows months of both private and public discussion regarding the future of the State’s domestic gas supply.

The equivalent of 15 per cent of Liquefied Natural Gas (LNG) production from export gas projects will now be required to be reserved for domestic use as a condition of access to WA land for the location of processing facilities

The target of 15 per cent reflects current estimates of future gas needs, estimated gas reserves and forecast LNG production.  As these estimates could change over time the target will be subject to periodic review. 

The policy contains flexibility, allowing negotiations between the State and LNG project proponents to occur on a case-by-case basis regarding the method by which proponents fulfil their domestic gas commitments, including from alternative sources. 

Natural gas is now the power source for 60 per cent of Western Australia’s electricity generation, however contracted gas supplies are due to expire in 10 to 15 years time.  By ensuring that sufficient supplies of gas continue to be available, the policy underpins Western Australia’s long-term energy security and economic development. 

The policy announcement follows a discussion paper released by the Government in February 2006 seeking industry views on future domestic gas policy.  It aims to balance the interests of gas producers, gas consumers and the broader WA community. 

The concept of a domestic gas supply reserve is not new.  The State Agreement which facilitated the development of the North-West Shelf LNG project contains provisions to secure a share of the gas reserves for domestic use, as does the proposed Gorgon project. 

The Domestic Gas Reservation policy is in accordance with the State Government’s Fuel Diversity in Power Generation Policy which is designed to enhance the security of electricity supply.  By ensuring the availability of competitively priced gas in the domestic market, competitive tension between fuel sources will be maintained.

Further details regarding the policy can be downloaded at www.doir.wa.gov.au/domgas.

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