While there is consensus that east coast gas prices will lift from the historically suppressed levels, there is less agreement amongst energy economists and industry analysts over whether prices will indeed reach an LNG net back.

Proponents of domestic gas reservation point to the reservation policy in Western Australia as a prototype to argue for similar initiatives in other states. They say such a measure will ensure that industrial and residential consumers are provided energy at reasonable costs especially in a producing country.

However, opponents of government intervention say that such policy is inherently anti-free market, and will stifle signals to explore for additional resources.

Gas prices for the Western Australian energy market are not widely published, but industry sources indicate that prices for existing contracts are between $1.42 to $3.87 per gigajoule.

Much of the lower end of the prices stem from the 20-year "take or pay" contract from the Woodside-operated North West Shelf project, which supplies about 65% of the state's domestic gas needs.

With major LNG projects currently underway including Woodside's Pluto project, and Chevron's Gorgon and Wheatstone, industry analysts say new contracts are being concluded at significantly higher prices of between $6-$9/GJ. This compares with recent average Australian LNG export on a free-on-board (FOB) basis of $11.37/GJ, and landed price of $12.37/GJ and $14.79/GJ to South Korea and Japan, respectively.

In contrast, east coast gas prices for current contracts are said to be around $2.98 to $3.95/GJ, while new contracts have been concluded at around $5/GJ.

Industry analysts agree that prices in Western Australia are among the highest in a producing country but differ on whether the domestic gas reservation policy of requiring 15% of the output to domestic use has had the intended benefit.

"It provides supply security to the local economy," Gavin Goh of the DomGas Alliance told EnergyNewsPremium.

He added that no other producing country allows for resources to be exported without giving priority to the local economy.

End-users as those represented by the DomGas Alliance have called for similar initiatives in the east coast states.

Goh pointed out the Queensland government's decision to not have a domestic quota and instead reserve dedicated fields for domestic use has not materialised and the Bligh government did not fulfil its policy promise.

Others counter that a domestic gas reservation does not provide the right market signal for producers to explore for gas.

"Has the policy been effective? Clearly not, because the rate of export of gas in WA has exceeded the rate of discovery," said an industry consultant.

He added that a quota policy won't solve the situation as producers will not be incentivised to find more gas.

There appears to be consensus that since most of the prime exploration acreages are held by big players, there are "significant barriers to entry."

However, despite the disparate view on a reservation policy, many industry analysts are divided on whether there would indeed be an LNG net back price in the east coast.

Many see the recent sale of gas by Origin to the Santos-led QCLNG project, reportedly done at an oil-linked price of $10/GJ as a singular incident, unlikely to be widespread.

A recent Macquarie report said that since the aggressive timelines for LNG exports in the east coast give local markets little time to react, medium-term prices are likely to go up.

"With rising prices set to commercialise an apparently vast east coast resource base, any supply shortage looks likely to be short lived," the report said.

"As a result, we believe growing fears that LNG exports will import international parity pricing in the long term are overdone.

"What's more, if Australia's huge resource base doesn't stop the rise to LNG netback, government intervention presumably will."