The DomGas Alliance is calling for Federal and State government intervention to help solve what it claims is a shortage of gas supplies in Western Australia that could threaten WA's economic future.
The DomGas Alliance is calling for Federal and State government intervention to help solve what it claims is a shortage of gas supplies in Western Australia that could threaten WA's economic future.
In an economic report released today DomGas said there was compelling evidence of market failure in the gas industry.
DomGas, which represents big gas consumers such as Alinta Ltd and Alcoa Ltd, is urging the government to scrap what it says are anti-competitive joint selling arrangements for domestic gas, increase scrutiny and transparency of retention leases and facilitate independent third party ownership of upstream infrastructure to help increase the commercial viability of domestic gas supplies.
DomGas chairman Stuart Hohnen said the report, compiled by Synergies Economic Consulting, confirmed its long-held view that there was a domestic gas supply crisis.
"Current gas users and project developers cannot secure new supplies of gas," he said.
He added that gas prices in WA had more than doubled in the past 12 months.
The DomGas report, which was commissioned in December, found compelling evidence of market failure.
It said that was largely because two operating entities hold close to 100 per cent of all gas reserves in developed fields.
The North West Shelf Joint Venture, which includes Woodside Petroleum Ltd and Chevron Australia, holds 92 per cent of current gas fields marketed as part of domestic gas projects while Apache Corporation holds accounts for 7.4 per cent of domestic gas resources.
Mr Hohnen said joint marketing arrangements for the North West Shelf joint venture struck in the 1970s and 1980s were no longer relevant.
He said the arrangements had facilitated development of the NWS however those arrangements were now significantly reducing competition by limiting the number of independent producers selling into the domestic market.
However, a spokesman for the NWS venture said there was no evidence to suggest that the joint marketing of domestic gas to new and existing customers in WA had substantially lessened market competition.
"The Venture is of the view that separate marketing is currently not feasible given the dynamics of the Western Australian gas market," he said.
The DomGas report also highlighted the need for greater scrutiny of retention lease.
It said half of WA's known gas reserves were held in retention leases, which give a company rights to develop the gas reserve for up to 15 years if it is thought to be commercially viable to do so.
