Macfarlane argued that the State Government’s policy of reserving up to 20% of gas from liquefied natural gas projects for the domestic market was likely to drive investment away from the state and to reduce exploration, leading to reduced availability of gas and higher gas prices in the medium-to-long term.
“At least two operators are considering going elsewhere and they probably will if this scheme is implemented, particularly at the 20% level,” he said.
“Gas reservations would be the best advertisement for LNG producers like Qatar that they could hope for.”
Speaking immediately after Macfarlane, Carpenter retorted that every WA government had moved to ensure adequate supplies of gas for the domestic market, and the LNG industry had flourished in WA despite this.
“Don’t be misled,” he told delegates. “There is no change of policy.
“A succession of governments from both side of politics have championed the LNG industry in a way that no other government, state or federal, has ever done.
“I’m doing what every other premier has done since Charles Court. The state opposition would do that as well.
“The last project that was negotiated – the Gorgon project – had a domestic gas reservation requirement and there was no problem in that.”
Carpenter said WA was an energy-based economy and it was essential that it had adequate gas supplies.
“It would be ludicrous for a state like WA not to have gas available for the domestic economy,” he said.
But Macfarlane had the last word. Speaking to reporters during morning tea, he said WA was not at risk of running out of gas and the gas reservations policy was aimed at securing cheap gas for industry rather than households.
“If the premier wants to provide industry with cheap gas, he has the option of subsidising gas for industry,” Macfarlane said.
The minister disputed that WA had long had a policy of gas reservations.
“There is no historical precedent,” Macfarlane said.
“[Carpenter] is imposing a condition that was not there when petroleum companies risked millions in exploration.”
WA’s North West Shelf projects was set up at a time of much lower LNG prices, and the State Government committed to buying substantial quantities of gas over decades in order to underwrite the development’s viability.
The Gorgon partners have an agreement with the state to bring gas onshore for the domestic market, providing it is commercially viable.
Neither project has formal gas reservations as such.
However, there are two rays of hope for prospective new WA LNG producers.
Macfarlane reaffirmed to reporters that the WA Government would not be able to impose gas reservations on projects whose gas reservoirs and processing facilities were based in Federal waters.
Meanwhile, Carpenter said that the State Government would not impose blanket gas reservation quotas on projects, but would vary the levels reserved in order to ensure that projects remained viable.
“There needs to be flexibility so that projects aren’t crippled,” he said.
The second annual APGAS, held at Perth’s Hyatt Hotel, attracted about 200 delegates from 19 Asian and Pacific Rim countries. It is to be held in Perth every year.
