One of Australia’s major mining companies has raised concerns that the federal government’s proposed domestic gas reservation policy could put up to $330 billion worth of undeveloped gas resources in Western Australia at risk. The legislation, aimed primarily at addressing supply issues and price volatility in the east coast gas market, may have unintended consequences for Western Australia’s comparatively stable gas sector.
The Cook Labor government, which holds office in Western Australia, has indicated it will seek a formal exemption or "carve-out" from the federal gas reservation plan. The policy proposes requiring liquefied natural gas (LNG) exporters to allocate up to 20 percent of their production to the domestic market, a move intended to bolster local gas supply and control prices. However, the Chamber of Minerals and Energy of Western Australia (CME WA) argues the bill threatens the state’s existing gas reservation framework, which it credits with fostering a balanced market characterized by relatively stable prices.
CME WA estimates that the proposal jeopardizes more than 25,000 petajoules of untapped gas resources in Western Australia, representing approximately $330 billion in potential value. The group contends that developing these resources would not only generate an estimated $89 billion in revenue for the Australian government but also support about 3,800 construction jobs within the state. The chamber warns that many of these gas projects already operate on thin margins and that the new regulatory layer introduced by the bill could deter investors, who may instead direct capital to overseas LNG projects.
A central point of contention is the ministerial power to grant exemptions under the bill. CME WA has criticised this provision for lacking guarantees or permanence, noting that discretionary powers could introduce uncertainty and potentially undermine the state’s regulatory role. Additionally, it highlights that if the domestic supply obligation cannot be set to zero, producers could face "double regulation" with overlapping compliance demands from both state and federal schemes.
The Western Australian government has confirmed ongoing discussions with federal officials aimed at securing an effective carve-out. A spokesperson for Premier Roger Cook described industry feedback as constructive and emphasized the state’s commitment to proposing amendments to preserve investment attractiveness and job creation.
Resources Minister Madeleine King, who introduced the bill earlier this month, framed the policy as a means to ensure LNG exporters contribute fairly to domestic markets without limiting the portion of gas available for export. “Exporters that benefit from Australia’s gas resources should make an appropriate contribution to the domestic markets connected to those resources,” she said, adding that the legislation aims to establish a predictable framework while allowing international trade to continue.
Industry players have expressed reservations about the bill’s potential impacts. For example, Woodside has cautioned that the policy might delay upcoming investment decisions on gas wells, while Origin Energy is seeking clearer guidance on how the scheme would operate during periods of surplus supply. CME WA also noted that the bill’s restrictions on export license transfers could complicate common business practices such as joint ventures and asset sales, effectively giving the minister veto power over transactions without clear benefits for domestic supply or pricing.
As the government moves forward with the proposed legislation, balancing federal objectives with Western Australia’s distinct gas market conditions remains a key challenge for policymakers and stakeholders alike.