Key Takeouts
Onshore gas producers can now export up to 20% of their production until 2030, lifting the previous export ban to stimulate development while ensuring domestic supply.
An annual statement will provide transparency on producers' compliance with gas reservation requirements and expected supply, with a review set for 2026 to consider potential legislative measures.
The government will enhance 'use it or lose it' policies for onshore gas licenses to prevent land banking and encourage active development of gas resources.
On 19 September 2024 the Western Australian Government announced updates to its domestic gas policy (the DomGas Policy). These updates form part of the government’s response to the recent parliamentary inquiry into the policy (Inquiry) which handed down its final report in August 2024.
Revised export policy
Under the revised DomGas Policy, onshore gas producers can export up to 20% of their total production until the end of 2030, after which all onshore production must be reserved for domestic use. This update will apply to new onshore gas projects and existing projects seeking to expand production.
With this latest revision, the ban on onshore gas exports, which was introduced in 2020, has temporarily been lifted. The 15% offshore reservation policy remains unchanged.
The government will continue to rely on the goodwill of producers to meet their reservation requirements (as opposed to implementing legislative measures), despite the Inquiry revealing that offshore producers have historically provided ‘just over half of what is required to be reserved’.
WA Domestic Gas Statement
The updates also introduce an annual WA Domestic Gas Statement (Statement) which will provide market participants with information on how producers are complying with their reservation requirements and how much gas is expected to be supplied in the domestic market in the short to medium term. The introduction of the Statement responds to the Inquiry’s findings which called for increased market transparency.
The Statement’s transparency model was developed in consultation with Australian Energy Producers and will provide information to the market on:
- historical gas supply by producer and expected supply by project;
- operating domestic gas projects; and
- domestic gas producers, including their obligation to supply the domestic gas market and strategy to meet their domestic gas obligation by end of field life and/or commitment life.
The first Statement released under the revised DomGas Policy is available here.
The effectiveness of the Statement will be reviewed in 2026, with the government to then consider legislating the transparency measure if required.
‘Use it or lose it’ approach to be strengthened
The WA Government has also committed to strengthening application of ‘use it or lose it’ provisions for onshore gas licences. The Department of Energy, Mines, Industry Regulation and Safety is expected to conduct a review of the Petroleum and Geothermal Energy Resources Act 1967 to determine how to best implement this approach.
This change is intended to prevent land banking of onshore petroleum tenements and is reminiscent of the Federal Government’s position on retention licences, as detailed in the Future Gas Strategy released earlier this year.
What does this mean for WA’s gas industry?
The Inquiry revealed that the domestic gas market will remain tightly balanced until 2030, with a supply deficit more likely thereafter. The latest updates to the DomGas Policy, in particular lifting the ban on onshore gas exports, is aimed at stimulating development while the State’s gas market is relatively balanced.
Allowing the operators of onshore gas fields to sell part of their gas production into the export market allows them to access significantly higher prices. As a result, developing onshore gas fields becomes more attractive, which in turn increases the likelihood producers will enter production and bring reserves on stream.