Policy updates
WA has benefited from the supply of domestic gas since the inception of the North West Shelf gas project in 1979. The Policy was formalised in 2006 and since then there have been various updates in response to evolving domestic and international market trends to ensure the Policy remains fit-for purpose. Key updates include:
- 2011, clarifying that LNG exporters would continue to make available domestic gas equivalent to 15% of LNG production from each LNG project, commit to building and/or obtaining access to infrastructure to meet their domestic gas commitments and show due diligence and good faith in marketing domestic gas. This update also highlighted the expectation that domestic gas supply should coincide with the start of LNG production and that LNG exporters could propose to offset their domestic gas commitments by supplying gas or energy from an alternative source rather than their LNG projects.
- 2020, banning the export of gas from the local pipeline network other than in exceptional circumstances, ensuring this gas remains available for local industry development. This update applied to onshore gas developments, except the Waitsia project which received an exemption, and did not change the policy settings for offshore LNG projects, where a 15% domestic gas commitment continued to apply.
- 2023, clarifying that the WA Government will not consider further exemptions for onshore gas developments on the local pipeline network to export gas, including those in the Perth Basin, due to a tightening market. For the Canning Basin, as these resources are not connected to the local pipeline network, a normal application of the Policy applies, allowing the export of gas and requiring these developments to make available 15% of exports for the local market.
- 2024, allowing expansion and/or new onshore gas projects to reserve 80% of gas production for the domestic market until 31 December 2030, after which these projects will be required to reserve 100% for the local market. This update is intended to facilitate access to exports markets to help stimulate investment and new gas supply for the WA market.
The 15% reservation for offshore LNG projects remains unchanged and also remains in place for the 'first mover' in the Canning Basin.
Offsets
The Policy provides for LNG exporters to propose an 'offset' to their domestic gas commitments by supplying gas or other energy from alternative sources, rather than supplying gas from their LNG projects. The majority of agreements entered into by the WA Government and LNG exporters include provisions for offsets. Offsets provide LNG exporters with the flexibility to provide alternative energy supply and ensures the Policy can continue to meet the State's long-term energy needs and support the energy transition.
The State currently has one approved offset in place, with the Additional Domestic Gas Commitment being treated as a contribution to the 2006 Pluto Domgas Arrangements (2006 Pluto commitment). Under this arrangement, Woodside has agreed to market and make available 45.6 PJ of domestic gas using its share of the North West Shelf gas reserves and infrastructure which is attributed to the 2006 Pluto commitment.
The Department of Energy and Economic Diversification is currently developing a framework for offsets under the Policy and will publish this framework, providing guidance to the market on the application of the offsets policy.
Parliamentary inquiry
Between June 2023 and August 2024, the WA Parliament's Economics and Industry Standing Committee (EISC) undertook an Inquiry into the Policy, reviewing the effectiveness of the Policy to respond to the risk of forecast market shortfalls and the transparency of supply and prices of gas.
The EISC highlighted 77 findings and made 30 recommendations for Government to consider. Government formally responded to the EISC and is currently implementing recommendations focused on ensuring the timely delivery of new gas supply and increased market transparency.
Further information on the Inquiry and Government's response to the recommendations can be found here.
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