DomGas Alliance has weighed into the debate surrounding Australia’s energy future as the Federal Government continues to formulate its white paper on energy security.
DomGas has been critical of the limited commitment secured from the Gorgon project joint venture participants to supply gas resources from the project to the Western Australian market. Five per cent of gas resources from the project have been committed to Western Australia’s domestic market, which depends on natural gas for over half of its primary energy needs.
Speaking on ABC’s 7:30 Report DomGas Chairman Tony Peterson wanted sufficient allocation of Australia’s gas reserves for domestic purposes to be a priority. DomGas is a Western Australian business alliance formed in 2006 in response to a shortage of gas for new developments in Western Australia.
“It’s certainly a strange situation where you have a major exporting nation to be faced with a gas shortage, but that is the reality,”? Mr Peterson said.
He went on to say “We have only two per cent of the world’s gas reserves, and in fact we’re aiming to be the world’s fourth largest exporter of LNG.”?
DomGas commented on domestic pricing in Western Australia stating “Despite being a major exporter of LNG, Western Australia has one of the highest gas prices of any gas producing or exporting economy in the world.”?
Executive Vice President of Woodside Energy Rob Cole has rejected Mr Peterson’s claim in a letter published in the Australian Financial Review. Mr Cole stated that “According to information published by the Western Australian Department of Mines and Petroleum, average natural gas prices in Western Australia at the end of 2008 were around $A3.70 per gigajoule (/GJ) compared with $A4.10/GJ on the east coast. Prices in the US, UK and Europe were significantly higher, at more than $US6/GJ, $US9/GJ and $US12/GJ.”?
DomGas has also expressed concerns over what it says is cartel selling of natural gas to the Western Australian market by participants in the Gorgon LNG project.
Chief Executive of the Australian Petroleum Production and Exploration Association Belinda Robinson had a different view of the selling practice. “What I think you’re referring to is what we call joint marketing, and that’s the ability of joint venture partners to market their natural gas as a whole, where the market is just simply not large enough to sustain each individual company marketing its gas into that market,”? Ms Robinson said.
DomGas described the claim that joint selling was necessary in the Western Australian market as misleading and has called on the Australian Competition and Consumer Commission (ACCC) to force Chevron, Shell and ExxonMobil to market their gas from the joint venture separately.
The Gorgon project participants however have made an application to engage in joint marketing of natural gas to the Western Australian market to the ACCC.
Despite Mr Peterson’s belief that cartel selling creates higher gas and electricity prices, the ACCC has granted interim authorisation for the Gorgon joint venture participants to jointly market natural gas to Western Australian customers. Interim authorisation allows the joint venture participants to continue to engage with potential customers and obtain information relevant to their investment decision.
The ACCC is currently undertaking public consultation and has released a report into the joint marketing proposal commissioned from the Allen Consulting Group. The ACCC expect its draft determination on the application will released in September.
In a move to secure long-term gas supplies for the state the Western Australian Government tabled the Gas Supply (Gas Quality Specifications) Bill 2009 stating the legislation would allow the development of a greater range of gas fields to supply the domestic market.
The bill was introduced to the Western Australian Parliament by Energy Minister Peter Collier who said “This is expected to provide increased competition in supplying the State’s gas needs and ensuring improved security of energy supply through a more diverse range of gas sources.”?
The legislation is expected to be passed by the end of this year.