Gas could cost more in State supply plan

Australia’s peak oil and gas lobby yesterday criticised the State Government’s plan to force gas companies to develop marginal gas fields as a condition of increased LNG sales overseas, claiming it could distort the gas market, hurt producers and hit consumers with higher bills.

Australian Petroleum Production and Exploration Association chief executive Belinda Robinson said she was disappointed that the Government had announced details of the plan without formally consulting the industry.

Energy Minister Fran Logan revealed this week that companies may be allowed to “trade” gas reserves between individual projects to comply with the Government’s requirement that they set aside up to 20 per cent to supply WA consumers.

The plan could require companies to develop marginal gas fields to supply the WA market in order to offset unrestricted gas exports from big LNG developments, such as Woodside Petroleum’s $5 billion Pluto project off Karratha.

Ms Robinson said the Government had “mentioned” the proposal to the association and individual companies, but she was disappointed to read about it in the newspaper before industry had been consulted formally on the specifics of the plan. “Certainly there has been no formalised process or consultation around this,” she said. “We understand that no decision has been made . . . and hope to work with the Government on any detail, as and when it becomes available.”

Ms Robinson said the association continued to support the “long-term reliable supply of competitively priced gas” for WA but believed a reserves trading scheme may be counterproductive.

“At first glance, the shallowness of the gas supply market and the relatively small number of potential new LNGdomestic gas projects makes it hard to see how formalising trading could work without introducing distortions in the gas market, without reducing the competitiveness of LNG projects and without disadvantaging other gas market participants, possibly even gas consumers,” she said.

APPEA believes gas reservation will discourage new gas developments, resulting in even fewer domestic suppliers and potentially forcing prices to rise even higher.

A spokeswoman for Premier Alan Carpenter declined to elaborate on the Government’s proposal or when a final policy decision would be reached, saying only that “discussions with relevant companies are ongoing”.


John Phaceas