WA Domestic Gas Policy

Policy
The WA Government’s Domestic Gas Policy aims to secure WA’s long-term energy needs and ongoing economic development by ensuring that liquefied natural gas (LNG) exporters also make gas available to the domestic market.

More than 60% of Australia’s estimated recoverable conventional gas reserves are located in the Carnarvon and Perth basins. These gas fields support WA’s LNG export industry, as well as our domestic gas needs. 

The policy seeks to make gas equivalent to 15% of exports available for WA consumers.

LNG exporters’ domestic gas commitments complement supply from domestic-only projects using the WA gas pipeline network. Gas in the WA pipeline network is not for export.

The WA Domestic Gas Policy

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LNG projects must demonstrate their ability to meet the policy as a condition of project approval. The WA Government applies the policy in a flexible manner.

LNG projects will commit to making domestic gas available by:

  • reserving domestic gas equivalent to 15% of LNG production from each LNG export project
  • developing and obtaining access to the necessary infrastructure (including a domestic gas plant, associated facilities and offshore pipelines) to meet their domestic gas commitments
  • showing diligence and good faith in marketing gas to existing and prospective consumers.

Projects are required to undertake these actions such that domestic gas is available to coincide with the start of LNG production. The timing may vary depending on project circumstances. Prices and contracts for domestic gas will be determined by the market. Any unsold gas must be reserved and made available in support of WA’s economic and industrial development.

LNG exporters are required to report on their efforts which are subject to independent review. Their obligations, progress in how they are being met and gas availability for local consumers will be transparent to the market.

LNG exporters may propose to offset their domestic gas commitments by supplying gas or other energy from alternative sources, rather than supplying gas from their LNG project. Offsets must provide a net addition to WA’s domestic energy supply.

The policy is given effect through long-term contractual arrangements between developers of LNG export projects and the WA Government. These agreements are struck at project inception to provide certainty for LNG project developers and allow for a sustained supply of gas into the local market.

We will communicate to the market any agreed changes to contractual arrangements with LNG exporters. Clarifications on the application of the policy, including for exporters contemplating using gas from the WA pipeline network, are noted below.

Development and application of the policy

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Successive WA Governments have maintained a domestic gas policy since helping underwrite the North West Shelf gas project in 1979. The policy was first formalised in 2006 and further clarified in 2012 and 2020.

The policy has been given effect through domestic gas agreements struck with LNG project developers. The nature, specifics and confidentiality of the agreements have varied over time.

Closer integration between domestic and export gas markets in Western Australia and on the east coast is affecting local gas supply. The WA Government has made a number of clarifications on the application of the policy, noted below, in order to preserve the integrity of the policy and local gas market.

Export via the existing WA domestic gas pipeline network

The WA gas market relies on LNG exporters’ WA Domestic Gas Policy commitments and gas from domestic only producers. Gas in the WA pipeline network is readily accessible to local consumers and needs to support WA's economic and industrial development.

The WA Government will not agree to the export of gas via the existing WA pipeline network other than in exceptional circumstances.

Other forms of gas export

Domestic gas is for WA consumers. Supply of gas to markets on the east coast, whether via an LNG import terminal or a pipeline connection to east coast gas markets, is an export for the purposes of the policy.

LNG used in international shipping is also an export. Marine fuel is a substantial market opportunity for the LNG industry and the WA Government is supporting the development of ship fuelling infrastructure in the Pilbara.

Implementation of the policy

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The Department of Jobs, Tourism, Science and Innovation implements the policy for the Minister for State Development, Jobs and Trade.

To read more visit Implementation of the Policy.

Page reviewed 26 August 2021