Cook highlights gas investment importance

Roger Cook has conceded a policy that requires 100 per cent of onshore gas to be used domestically will mean little if it stifles investment, as his government continues to explore its domgas settings.

Mr Cook reiterated his government’s willingness to make changes to its gas rules today, in a move that will likey offer confidence to a sector waiting on a clear directive. 

“We have a 100 per cent domestic gas reservation policy for onshore gas, but that will be to no avail if we have 100 per cent of no domestic gas,” he said.

“We are working with the industry proponents and leaders to understand what their commercial needs are, to see what policy levers we need to pull to make sure that we benefit from that domestic gas.”

The government closed the door to offshore export exemptions for new domestic gas projects in the Perth Basin last year due to concerns around projected shortfalls.

That move angered industry, notably project developers including Mineral Resources and Strike Energy, which argued it created an unfair playing field and could impact final investment decisions on projects.

A Perth-basin peer – the Waitsia gas project being developed by Japan’s Mitsui & Co and Kerry Stokes-backed Beach Energy – received an exemption allowing it to export 50 per cent of production from then premier Mark McGowan in 2020.

MinRes, where Mr McGowan is now an advisor after his political retirement last May, is developing the Lockyer gas project, but managing director Chris Ellison says it won’t make a final investment decision until it knows what size plant it needs to build.

The newest member of the S&P/ASX 200, John Poynton chaired Strike has a government-supported plan to bring four projects to production by the middle of the decade. It has repeatedly called out what it considers to be reactive policy setting.

Mr Cook said he had not spoken directly to Mr Ellison, who has been particularly vocal and whose company sponsored a Labor party fundraiser in December, about the policy. 

“We’re working with everyone,” he said.

“It doesn’t matter if they are people that are suppliers of gas, or the customers of gas, we want to get the policy settings right.”

He did not give a timeline for a new policy decision.

The conversation around gas policy comes following the Australian Energy Market Operator’s projections in December, of major gas shortages in the state into the 2030s without new supplies.

Mr Cook has softened his stance on export exemptions since August, and today’s commentary is consistent with recent rhetoric.

But in a supplementary submission to the state's ongoing domestic gas inqury, one of WA's largest gas users called out some onshore gas developers for their claims that projects would only be viable with an export component.

In the recently published submission, dated December 21, South32 energy and carbon manager Michael Brooks said there was enough demand in WA for domestic-only projects to be viable.

"South32 is confident that any new gas producer can find reputable, credit worthy buyers at prices that make domestic gas projects viable, including an acceptable return for gas explorers," he said. 

"We have engaged with all parties in the Perth Basin and remain willing to negotiate when they are in a position to engage with gas buyers."

South32 operates the Worsley alumina refinery, and recently entered a binding sales agreement with Strike for 50 per cent of production capacity from its South Erregulla project over a five-year term.