02/08/2013 - 15:53

Five years after Varanus, gas reforms launched

02/08/2013 - 15:53

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Five years after Varanus, gas reforms launched
IMO chief Allan Dawson and Energy Minister Mike Nahan (R).

Energy Minister Mike Nahan has lauded the increased transparency he expects will follow the launch today of two gas market reforms, which have raised industry concerns about added costs and excessive disclosure.

The new Gas Bulletin Board website provides a snapshot of the gas market, with information on production, transmission, storage capacity and demand.

The state government’s Independent Market Operator has also launched its first Gas Statement of Opportunities (GSOO), which concludes there is plentiful supply to meet future demand in the Western Australian market.

“Anything that improves transparency is a good thing,” Mr Nahan told Business News after the launch today.

Industry players have generally supported the concept of a gas bulletin board but have questioned whether the costs justify the expected benefits.

Speaking at the launch, Mr Nahan acknowledged the costs issue.

“One of the arguments was that we do not have a market that’s as large as the eastern states, to warrant such information flows and their costs,” he said.

“I think we are building for the future.

“We are highly reliant on gas here, there are a whole range of issues, and one of the key things is improved transparency.”

Mr Nahan said the gas bulletin board was “a good development but will always require some tweaking”.

He also welcomed the GSOO, saying there continued to be debate over the adequacy of the state’s gas supplies.

“The best way to deal with this is to provide sunlight on it, transparency and get everybody involved," Mr Nahan said.

“I look forward to having a robust debate about the estimates and information provided in it.”

He noted that the future supply-demand balance hinged on negotiations between the state's biggest supplier, the North West Shelf venture, and one of the largest users, Alcoa, when their current contracts start to expired in 2018.

The creation of a Gas Bulletin Board was one of the recommendations of the inquiry that followed the 2008 Varanus Island gas supply disruption.

Mr Nahan said the website provided the government and the industry with another tool to manage gas supply disruptions that may potentially escalate into an emergency.

The committee also recommended the annual publication of the GSOO to identify investment needs and opportunities in the gas sector.

Industry lobby APPEA, which represents gas producers, said the GSOO confirmed that WA has more than enough gas for both domestic and export markets.

The report forecasts annual growth for WA’s domestic gas supply at 3.7 per cent out to the year 2022, compared to average growth for domestic gas demand of 1.1 per cent each year. 

APPEA’s chief operating officer western region Stedman Ellis said: “the forecasts from Western Australia’s first Gas Statement of Opportunities put to rest any claims that the WA gas market is not ‘working’ or that there is an imminent supply shortfall.

“The GSOO notes that by 2016 WA will have transitioned from two to six domestic gas suppliers. This increase in supply will meet growing domestic gas demand and enhance energy security.

“Development of WA’s domestic gas market has been driven by market forces, price movements and the growth of the gas export industry, not by interfering with commercial incentives. 

“This is consistent with our long-held view that WA’s long-term energy security is best delivered through efficiently operating markets and by encouraging new entrants and competition."

 

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