The Government of Western Australia in an update to the WA Domestic Gas Policy has ruled out giving exemptions from the state's domestic gas policy for onshore gas developments on the existing pipeline network to export LNG.
"The WA Domestic Gas Policy will safeguard and secure Western Australia's gas supply and support long-term economic and industrial development in the State," it said on its website Aug. 15.
According to the update, new gas projects in Australia's Perth Basin will not be allowed to export LNG and will have to direct their supplies to the local market in Western Australia.
"Gas from the existing pipeline is for Western Australian industry and consumers only," it said.
"For the Canning Basin, these gas resources are not connected to the existing pipeline network and as such a normal application of the WA Domestic Gas Policy applies, which requires gas project developers to make available 15% of exports for the domestic market," it said.
Australia is among the world's top LNG exporters and restricted supplies from the country hold the potential to spark global market imbalances. WA is home to over 60% of Australia's recoverable and conventional gas reserves, which are in the Carnarvon and Perth basins.
In a statement Aug. 16, the Australian Petroleum Production & Exploration Association noted that the government's decision to not consider any exemptions from the WA Domestic Gas Policy would hamper investments in new onshore gas supply and discourage producers from bringing new supply into the market.
"This is a disappointing outcome particularly given there is a Parliamentary Inquiry currently taking place into the effectiveness of the Domestic Gas Policy and Government has pre-empted any recommendations out of the Inquiry process," APPEA WA Director Caroline Cherry said.
"Part of the ongoing inquiry was looking at the Government's role itself in ensuring adequate supply into the future and yet these pre-emptive policy changes without consultation will undermine investor confidence."
According to the Australian Energy Market Operator's WA Gas Statement of Opportunities statement in December, overall WA domestic gas demand is forecast to increase from 1,099 TJ/day in 2023 to 1,278 TJ/day in 2032, at an average annual rate of 1.7%.
AEMO's Quarterly Energy Dynamics Q2 2023 in July noted that the weighted average Balancing Price in the WA's Wholesale Electricity Market for Q2 2023 hit a record high of $113/MWh while the weighted average Short-Term Electricity Market price there for Q2 2023 was $101/MWh, a 76% increase compared to Q2 2022 and a Q2 record high.
The price increase was due to a reduction in the quantity of energy made available and changes to the fuel mix, the AEMO said.
"WA needs to bring more gas supply to the market to power WA's growing resources sector and support the South West electricity system as coal-fired power is phased out," Cherry said.
