THE oil and gas industry has reacted quickly to suggestions that changes needed to be made to the Western Australian gas reservation policy.
Newly appointed Nationals Leader in WA, Brendon Grylls, announced that recently one of his first acitons would be to seek to reform WA’s domestic gas policy.
This drew an instant rebuke from the Australian Petroleum Production & Exploration Association (APPEA) which said that expanding WA’s gas reservation policy would destroy jobs and investment in regional communities, undermine the State’s finances and reduce the volume of gas available for local use.
“The only change that should be contemplated is the complete removal of the policy,” a deeply concerned APPEA Chief Operating Officer – Western Australia, Stedman Ellis, said.
‘Reservation is effectively a tax on gas production. It undermines energy security by discouraging the investment needed to increase gas supply and put downward pressure on prices.
“Gas producers are already struggling with low commodity prices. Imposing further costs on gas operations would undermine their international competitiveness and raise serious sovereign risk questions for the State.
“WA cannot afford to damage its hard-earned reputation as a reliable supplier of natural resources and a safe destination for global investment,” he said.
Mr Ellis urged the WA Nationals to focus on policies that encourage investment in gas production.
“New gas projects are good for regional, state and national economies. They provide jobs and investment, taxes and royalties and much-needed export revenues.
“Any move to expand the existing reservation policy by imposing further restrictions on gas exports would be extremely irresponsible.
“Forcing more gas into an already over-supplied domestic market in WA will also undermine investment in the onshore gas industry, which pays royalties directly to the State Government.
“This would actually mean less money to repair the state budget and less money for the National Party’s Royalties for Regions program.
“It is akin to killing the goose that lays the golden eggs.
“There is a very good reason credible, independent bodies such as the WA Economic Regulation Authority, the ACCC and the Productivity Commission have all warned against gas reservation – the economic costs far outweigh any perceived benefits,” Mr Ellis said.
The threat to the gas sector was not the only attack on the resources sector announced by Mr Grylls who said the Nationals would seek to introduce a new revenue stream by raising the 25 cent production rental in the State Agreements with Rio Tinto Iron Ore (RTIO) and BHPB Iron Ore (BHP) to five dollars.