A group representing the interests of the state’s biggest gas users wants the Economic Regulation Authority to monitor domestic supply, a government inquiry has heard.
A group representing the interests of the state’s biggest gas users wants the Economic Regulation Authority to monitor domestic supply, a government inquiry has heard.
DomGas Alliance chairman Richard Harris told the Peter Tinley-chaired inquiry into the state’s domestic gas policy that the ERA would be the logical body to improve transparency in the domestic market, which requires LNG producers to supply 15 per cent of production locally.
Mr Harris said the current system meant LNG producers were only required to disclose the amount of gas they deliver to market to the Department of Jobs, Tourism, Science and Innovation annually.
He argued it should not be the responsibility of JTSI to monitor the performance of LNG producers against their obligations, given domestic gas requirements are a small part of the state agreements between the department and the producers under its remit.
“We’ve had a look at what’s available, and I think the ERA is the most logical body to do that,” Mr Harris said.
Mr Harris said the current arrangement meant information supplied to the public and customers was provided out of date, with no visible mechanism to show what’s happening in practice.
“In terms of the ability of a body to oversee the data, experience tells me that JTSI isn’t really the appropriate body to do that,” he said.
“This inquiry is about looking for improvements to the policy, and one of the first things I would look at is how we collect the data on the performance of the policy.
“The policy is only measured by how well those LNG producers are delivering against their obligations, and we don’t really know, because we’re only seeing it usually two years in a lag of how well producers are going.”
Last month representatives from JTSI told the inquiry the 15 per cent gas reservation policy was set out in individual state agreements applied to production across the life of a project, rather than a set timeframe, allowing producers to prioritise exports when commercially appropriate to do so.
The alliance – with a membership including Alcoa Australia, Cockburn Cement, Coogee Chemicals, CSBP Fertilisers, Wesfarmers and Yara Pilbara – has long alleged some but not all producers are falling short of meeting their compliance obligations.
Mr Harris said the responsibility for policy enforcement sat with the minister, and that an independent body’s recommendation was likely to carry more weight than that of a government department.
He suggested the ERA be given the ability to make public recommendations to the minister when producers were falling behind on their obligations, but stopped short of suggesting overarching legislation in the belief it would punish all producers rather than individuals.
“A good number of producers are doing the right thing, and historically have done very good,” he said.
“We don’t want to take action to solve a problem which is a problem with not necessarily all of the producers but maybe one or two.”
DomGas Alliance said government did have a role to play in encouraging development of projects sitting undeveloped, particularly those off the North West Shelf.
Adequacy of infrastructure was also in focus, with Mr Harris singling out an undersized interconnector at Woodside’s Pluto project which the alliance says limits the project’s domestic gas delivery to 25 terajoules per day, against a notional commitment of 115 terajoules.
The domestic gas policy sets out a requirement for producers to develop necessary infrastructure to demonstrate their ability to supply the local market.
“This is a piece of infrastructure which should have been developed,” Mr Harris said.
“Clearly, I think, that part of the domgas obligation needs to be enforced.
“Pluto is the one project which we’ve highlighted in our submission that stands out as the one that’s underperforming in terms of its obligations, both in terms of delivery and infrastructure.”
Mr Harris said overall, the DomGas Alliance was a strong supporter of the domestic gas policy.
“If you look at what’s happened on the east coast, you know, they would give their right arm to have the policy that we have,” he said.
DomGas Alliance is opposed to lifting restrictions on LNG exports from the onshore Perth Basin, citing high and rising demand for gas supply domestically.
