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West Australian exporters could be forced to lift the amount of gas kept in reserve for the domestic market under a new framework set out by the federal government.
On Monday, the Albanese government released its draft design framework for the domestic gas reservation scheme, which includes new legislation to require LNG exporters to supply a proportion of their total supply production – equivalent to 20 per cent of their exports – as part of their domestic supply obligation.
While the framework is still only in its draft phase, with feedback requested by the end of June, the scheme is set to be applied nationally and come into effect from July next year.
Under legislation set out by the state government two decades ago, WA gas exporters currently provide a 15 per cent proportion of their exports to the domestic market – although that figure is set over the life of a project and not an annual designation.
The draft federal framework stated the new rules would be applied nationally, although current regulatory arrangements under state-based schemes would be recognised.
A WA government spokesperson said the government would engage with the Commonwealth throughout the design process, but was “confident the national scheme will be compatible with WA’s successful policy once finalised”.
“The WA state government has been assured by the federal government that WA industry won’t be adversely impacted by the national policy,” the spokesperson said.
“The national reservation policy is designed to solve a problem in other parts of Australia, rather than get in the way of WA’s proven approach.”
However, Australian Energy Producers chief executive Samantha McCulloch said the patchwork of exemptions creates significant and ongoing uncertainty for gas producers and users in WA and the Northern Territory.
“Australia’s oil and gas industry supports a prospective reservation policy that encourages investment and promotes a competitive and functioning gas market,” she said.
“But the proposed design does the opposite and, if implemented, would be an own goal for Australia’s future energy and economic security,” she said.
McCulloch said the framework deepened industry concerns that the proposed scheme will undermine investment in new gas supply, displace domestic-focused producers, and damage Australia’s standing as a reliable export partner.
Meanwhile, Conservation Council of WA executive director Matt Roberts said the Commonwealth reserve’s framework meant the state could easily secure its energy needs without sacrificing Scott Reef and the Kimberley.
On Thursday, Premier Roger Cook told the Australian Financial Review that WA could be forced to start fracking the Kimberley if Woodside’s Browse gas project was not developed – a stance he doubled down on in budget estimates that same day.
“There are decisions coming for the state into the future. Our [Australian Energy Market Operator] projects a gas shortfall in the early 2030s and as a state, we need to come to a decision about what that means for Western Australia,” he told estimates.
But Roberts said that if the Albanese government could succeed where the state government has failed by implementing a domestic gas reservation policy that actually worked, “we’ll have more than enough gas for WA to thrive through the energy transition.”
“Roger Cook has confected a false ‘either-or’ scenario where avoiding supposed gas shortfalls rests on a choice between drilling at Scott Reef or fracking in the Kimberley,” Roberts said.
“But we need to remember, these predicted shortfalls only exist because the WA government has failed to enforce its own domestic gas quotas.
“Only 8 per cent of the agreed 15 per cent of gas has flowed into WA businesses and households since the WA gas reservation scheme was introduced. The rest has gone overseas.”
That shortfall comes when producers vow to increase the amount of gas provided to the domestic market later in a project’s lifespan to make up for lower reservation amounts in the short term.
Roberts said a proper gas reservation scheme would help WA make an urgent transition to the use of renewable energy.
“But approving new gas projects will only set us further and further back,” he said.
“WA doesn’t need new gas projects – we need our government to stop letting multinational gas corporations take us for a ride.
“Western Australians love the Kimberley, and we don’t want to see it turned into an industrial zone by gas frackers.”
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