WA Premier Alan Carpenter yesterday told the West Australian newspaper that liquefied natural gas projects would have to make 15% of their gas reserves available for sale in the domestic market, provided it was “commercially viable” to do so.

Carpenter's announcement reiterates a report published by PNN two weeks ago quoting WA Resources Minister John Bowler on the same issue.

Carpenter said the plan will permit companies to choose which fields the domestic gas comes from. It will also let proponents of new LNG projects to defer their domestic gas requirements for several years.

“What we will say is the principal policy position would be 15% of the gas reserves, or the equivalent thereof, has to be made available to the domestic market on a commercially viable basis,” the West Australian newspaper quoted as Carpenter saying.

“It may be that if there’s no market (for the domestic gas) and that 15% commitment has to be deferred until the market develops or is established.

“But they need to go into their projects knowing that in general terms, 15% of their reserve – or the equivalent thereof from somewhere else if they can’t extract it from that particular reserve – has got to be made available for a domestic energy market.

“They can meet the requirement in a variety of ways but they have to be actually required to do it. Otherwise we’re just not going to get any gas out of them.”

The announcement comes after over six months of heated public clashes between Carpenter, Federal Minister for Resources Ian Macfarlane and Woodside chief executive Don Voelte.

Macfarlane has argued that the plan would deter investment and exploration, while Carpenter has said reserving a portion of gas from LNG projects for the domestic market was not a new concept.

Then in late September, the row erupted again as a result of the new gas supply contract between Santos and Wesfarmers for a WA-based LNG plant.

While both ministers welcomed the news, each took a different view on what it meant to the state’s gas reservations proposal.

Carpenter told Parliament that it highlighted the need for gas reservations to ensure other natural gas projects could go ahead in the future.

But a spokesperson for Macfarlane said the deal showed the market could deliver more gas to domestic customers without intervention.

The spokesperson told the West Australian that discussions of a flexible approach to the issue were welcome but it did not change the Howard Government’s view that domestic gas reservations threaten the future of Australia’s LNG industry.

“Flexibility is a nice word but as long as he’s talking about reservation, he is waving a red flag to the international market and the Federal Government won’t stand for that,” the spokesperson said.