Western Australia is one of the most energy- rich locations in the world. In addition to our abundant renewable energy resources, we are also home to some of the world’s biggest offshore natural gas reserves.
The availability of natural gas made the Western Australian economy more dependent on natural gas supplies than any other state. We lead the nation in the use of natural gas to generate electricity for businesses and households, as well as powering downstream processing and manufacturing.
Successive governments have negotiated in an ad hoc way with offshore LNG project proponents to secure domestic gas supplies to Western Australia. This started with the negotiation of supplies from the North West Shelf, which have underpinned the domestic Western Australian domestic gas market ever since.
In 2006, the price of natural gas in WA’s domestic market commenced a three-year period of significant increases.
This was driven by strong growth in domestic demand for gas and the rising international LNG spot price.
Given the importance of natural gas to the WA economy, the Carpenter Government put in place a domestic gas reservation policy, that required all LNG projects to reserve 15 per cent of their reserves for the domestic market.
The objective of this policy was to deliver a long term energy source to Western Australian householdsand businesses, at a price that would underpinthe competitiveness of secondary industries like manufacturing and downstream processing.
Since 2009, the price of gas delivered to Perth for large industrial customers has fallen from about $16/GJ to about $10/GJ in 2015. However, in real terms, this is still signi cantly above the price of about $5/GJ (in 2015 dollars) delivered to large industrial customers before the price increases that commenced in 2006.
A plan for WA jobs should include a review of the effectiveness of the existing domestic gas reservations policy, with a view to making it more effective in delivering continuous supplies of natural gas to industry, at prices which underpin competitiveness and drive job creation.
Sign our petition and download our plan for WA jobs here.