A plan outlined by the WA Government to reserve a big part of the State's gas reserves for the local market does not promote a robust and viable gas industry in Western Australia, according to Australia's peak body representing the upstream oil and gas industry.
APPEA says that instead of pursuing a domestic gas reservation policy, the WA Government should be focusing on how it can maximise the development of more gas supply capacity.
"The gas industry understands the Government's desire to ensure Western Australia has long term supplies of gas at competitive prices," APPEA WA director Richard Ellis said today.
"However, APPEA and the gas industry do have a concern that proposals to quarantine 15 per cent of WA's gas reserves could in the long run reduce supply competition and long term supply security."
"The Government would be better off focusing on how to best promote the development of more onshore and offshore gas fields," Mr Ellis said.
"There is plenty of gas in Western Australia and in the adjacent offshore waters under Commonwealth jurisdiction - in fact more than 100 years at current production rates.
"However, many of the large offshore fields have remained undeveloped since their discovery 20 or 30 years ago.
"Gas resources are not an issue. The real challenge that must be addressed is the need to develop more onshore and offshore gas production facilities.
"The market uncertainties facing the developers of new gas projects and the inability of the WA market alone to support the development of remote offshore fields, need to be considered."
Mr Ellis said APPEA believed the best way to promote more gas supply was through the maintenance of a competitive market as occurs in most other parts of the world.
"Rather than putting new impediments in the way of future LNG and domestic gas projects, the WA Government needs to adopt policies which address some of the State's disadvantages and encourage oil and gas companies to invest in the State," he said.
"Quarantining a major portion of our gas reserves, increasing sovereign risk and making the economics of developing remote, high cost, offshore gas fields even less attractive and disadvantaging those that can supply the WA market, is not the way to achieve long term supply security."
Mr Ellis also called on the Government to report on its review of submissions by the industry and other stakeholders and seek further comment on the options being considered before a policy position is finalised.
"The Government is to be commended for its consultative process to date and we would like to see that continue as policy options are further developed," he said.
