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Calls for review of WA gas statement

The latest GSOO predicts an abundance of gas in Western Australia, with potential gas supply at 107 TJ/d greater than demand. However, DomGas has argued that this doesn’t reflect the market and that gas consumers are concerned the results are misleading.

DomGas Alliance Executive Director Matt Brown said the review needs to be carried out to guarantee the Independent Market Operator (IMO) who compile the GSOO are making full use of the powers it has been given.

“We remain concerned that the IMO has underestimated growth in domestic demand and has been unrealistic in its assessment of gas supply,”? said Mr Brown.

“There is a big difference between producers having sufficient production capacity to supply gas and those same producers being willing to actually supply gas to the market at competitive prices.

“We have already seen the interim results of the ACCC effectively using its powers on the East Coast to get to the truth about gas supply. We need to be confident that the IMO through its GSOO process is hitting the same level of effectiveness.

“This review could be achieved by a reference to the WA Parliament’s Economics and Industry Standing Committee, which has built up a significant knowledge base on gas sector issues through recent inquiries.”?

While Mr Brown believes the GSOO information gathering process needs inspection, it can be used as evidence for the success Western Australia’s hotly contended domestic gas reservation policy. He said “While question marks remain over the GSOO forward forecasts, one thing is certain: domestic reservations have been essential to ensuring Western Australian industry has a chance to bid for Western Australian gas.”?

The Australian Petroleum Production and Exploration Association (APPEA) has repeatedly stated the domestic reservation policy lowers the areas economic attractiveness for external investment and is unnecessary – and uses the previous statement as counterevidence.

On 23 June 2015 APPEA western region chief operating officer Stedman Ellis said “The reality is the policy is not needed to deliver energy security, because – as the Independent Market Operator advised last year – WA’s domestic gas market is already well supplied into the future.

“The Economic Regulation Authority has also warned that the policy would have negative economic consequences for the State.

“The Government needs to accept that its reservation policy simply adds to the capital cost of projects that are already facing growing global competition.”?

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