Implications of Western Australia’s updated domestic gas policy

Abstract

In August 2023, Western Australia (WA) updated its domestic gas reservation policy to restrict onshore gas exports through the existing pipeline network, primarily affecting the Perth Basin. While the policy update aimed to secure domestic gas supplies amid projected shortfalls, it may complicate the outlook for the WA gas market through restricted access to capital, reduced incentives for substantial investments in large-scale developments, and the elimination of a potential future gas demand source for the state. WA’s domestic gas consumption is expected to peak by the end of this decade and then steadily decline as part of the state’s net-zero emission ambitions. In contrast, the liquefied natural gas (LNG) market especially in Australia’s main buying partners in Asia is set to grow into the 2040s, offering lenders demand certainty. This paper assesses the potential implications of WA’s updated domestic gas policy. The state’s domestic gas market is projected to require 8–10 tcf of gas over 2023–50. Currently producing and under-development fields are expected to supply approximately 5 tcf during this period, leaving around a 2 tcf gap to be filled by the onshore resource base and potential new Domestic Market Obligations (DMOs). The paper reiterates the importance of gas in WA’s energy transition and the need to ensure future supply failing which prices could rise to LNG netback or trigger further intervention.