The Chamber of Minerals and Energy WA (CME) strongly supports Premier Roger Cook’s call for Western Australia to be carved out of the Commonwealth’s proposed domestic gas reservation scheme – and will continue advocating for an exemption that is enshrined in law.
Mr Cook today argued for an exemption on the basis WA already has a longstanding domestic gas reservation policy that is exceeding the outcomes the Commonwealth is seeking on the east coast.
CME Chief Executive Aaron Morey said a legislated carve out was essential to protect WA’s successful gas market from unintended consequences flowing from reforms designed to address east coast challenges.
“WA is physically disconnected from the east coast gas market and has operated its own domestic gas reservation policy for two decades,” Mr Morey said.
“That policy has helped deliver reliable supply and gas prices that in recent years have been around half those on the east coast. As the Premier rightly highlights, the volume of gas delivered into our State’s domestic market last year exceeded 20 per cent of LNG exports.
“We have an economy that depends enormously on gas. WA’s industrial gas demand is greater than all the eastern states combined, supporting the resources projects that generate jobs, investment, royalties and export income for the entire country.
“The worst outcome would be a mechanism that could result in WA gas being redirected east. Undermining the gas supply that powers the engine room of the national economy would make no sense.
“The Commonwealth is responding to genuine gas supply challenges on the east coast. We understand the problem they are trying to solve and we are working constructively with them on the solution.
“But WA has a fundamentally different gas market and our message is simple: Don’t create problems here while trying to solve problems elsewhere.”
Mr Morey said it was vital WA’s exemption be enshrined in legislation to provide long-term policy stability.
“Any model that ultimately relies on the discretion of a Federal minister does not provide the certainty needed for investments that are measured in decades and billions of dollars,” Mr Morey said.
“Gas projects require enormous upfront investment and long term contracts, including with our international trading partners. Just the prospect of Commonwealth intervention in the WA market creates uncertainty about the rules under which those investments will operate.
“That is why the legislative architecture matters. WA should be outside the national scheme from day one, rather than dependent on an exemption that can be changed or removed by a future minister.”
Mr Morey added that applying elements of the national scheme to WA could also undermine the investment required to bring on new gas supply.
“We are also concerned about imposing unnecessary Commonwealth regulatory requirements on WA producers, including annual reporting to the Australian Energy Regulator, which currently has no regulatory role in WA’s gas market,” Mr Morey said.
“CME is working with the Federal Government to land a national framework that addresses east coast gas challenges without undermining a WA market that is already delivering.
“Get the east coast reforms right but protect what is working in the west.”
Media contacts:
Josh Zimmerman j.zimmerman@cmewa.com / 0404 947 719
Natasha Mutch n.mutch@cmewa.com / 0435 383 382