The profile of domestic gas supplies has risen significantly since an alliance of some of the state’s biggest gas consumers was formed a year ago this month.
The profile of domestic gas supplies has risen significantly since an alliance of some of the state’s biggest gas consumers was formed a year ago this month.
The DomGas Alliance has strengthened in that time, with mining giants Newmont Mining Corporation Ltd and Fortescue Metals Group Ltd joining founding members Alinta Ltd, Alcoa Inc and the Dampier Bunbury Pipeline.
Moly Mines Ltd is the latest company to sign up to the alliance, which this week put domestic gas supplies back in the spotlight when it released a report, commissioned more than six months ago, calling for urgent government intervention to solve shortages in domestic gas supply.
Specifically, DomGas wants the government to scrap anti-competitive joint selling arrangements for domestic gas because it said the arrangements limited the number of independent producers selling to the market.
That drew a quick response from the North West Shelf Venture, which holds 92 per cent of current gas fields marketed as part of domestic gas projects, and includes Woodside Petroleum Ltd and Chevron Australia.
“The venture is of the view that separate marketing is currently not feasible given the dynamics of the Western Australian gas market,” a spokesman for the NWS venture said.
He said there was no evidence to suggest that the joint marketing of domestic gas to new and existing customers in WA had substantially lessened market competition.
And the opposing views kept on coming.
Coinciding with the release of DomGas’s report, a fact sheet compiled by Australian Petroleum Production & Exploration Association Ltd arrived at WA Business News.
It said there was an abundance of gas in the state and there was “no gas crisis”.
DomGas chairman Stuart Hohnen said its report, commissioned by Synergies Economic Consulting, showed WA’s gas supply market was highly concentrated, with two operating entities holding close to 100 per cent of all gas reserves in developed fields.
Mr Hohnen said joint marketing arrangements for the NWS struck in the 1970s and 1980s had facilitated its development, but those arrangements were now significantly reducing competition by limiting the number of independent producers selling into the domestic market.
Mr Hohnen said the gas supply shortage had critical implications for WA’s economic future.
“Natural gas underpins the state’s manufacturing and mining industries, which support hundreds of thousands of jobs,” he said.
The gas supply debate has attracted its fair share of controversy, particularly when Woodside chief executive Don Voelte hit out a Premier Alan Carpenter’s gas reservation policy, which proposes that 15 per cent of all gas deposits should be reserved for the domestic market subject to the proviso it is commercially viable to supply domestic customers.
The DomGas Alliance wants the government to take that policy a step further and limit the proportion of gas that could be sold to the domestic market under joint marketing arrangements.
DomGas also echoed calls made by the Chamber of Commerce and Industry WA earlier this year to increase scrutiny and transparency of retention leases.