WA Domestic Gas Policy

LNG projects must demonstrate their ability to meet the policy as a condition of project approval. The WA Government applies the policy in a flexible manner.

The policy is given effect through long-term contractual arrangements struck between LNG exporters and the WA Government. These arrangements are struck at project inception to provide certainty for LNG project developers and allow for a sustained supply of gas into the local market.

LNG projects will commit to making domestic gas available by:

• reserving domestic gas equivalent to 15% of LNG production from each LNG export project
• developing and obtaining access to the necessary infrastructure (including a domestic gas plant, associated facilities and offshore pipelines) to meet their domestic gas commitments
• showing diligence and good faith in marketing gas to existing and prospective consumers.

Projects are required to undertake these actions such that domestic gas is available to coincide with the start of LNG production. The timing may vary depending on project circumstances.

Prices and contracts for domestic gas will be determined by the market. Any unsold gas must be reserved and made available in support of WA’s economic and industrial development.

LNG exporters are required to report to the WA Government on compliance against their individual domestic gas obligations on an annual basis. The State may also assess compliance through independent expert review. The WA Government will make LNG exporters’ obligations, progress in how each obligation is being met and total gas availability for local consumers transparent to the market.

LNG exporters may propose to offset their domestic gas commitments by supplying gas or other energy from alternative sources, rather than supplying gas from their LNG project. Offsets must provide a net addition to WA’s domestic energy supply.

The WA Government will communicate to the market any agreed changes to contractual arrangements with LNG exporters. Clarifications on the application of the policy, including for exporters contemplating using gas from the WA pipeline network, are noted below.

The policy has been given effect through domestic gas agreements struck with LNG project developers. The nature, specifics and confidentiality of the agreements have varied over time.

Closer integration between domestic and export gas markets in Western Australia and on the east coast is affecting local gas supply. The WA Government has made a number of clarifications on the application of the policy, noted below, in order to preserve the integrity of the policy and local gas market.

Export via the existing WA domestic gas pipeline network

The WA gas market relies on LNG exporters’ WA Domestic Gas Policy commitments and gas from domestic only producers. Gas in the WA pipeline network is readily accessible to local consumers and needs to support WA's economic and industrial development.

The WA Government will not agree to the export of gas via the existing WA pipeline network.

Other forms of gas export

Domestic gas is for WA consumers. Supply of gas to markets on the east coast, whether via an LNG import terminal or a pipeline connection to east coast gas markets, is an export for the purposes of the policy.

LNG used in international shipping is also an export. Marine fuel is a substantial market opportunity for the LNG industry and the WA Government is supporting the development of ship fuelling infrastructure in the Pilbara.

To read more visit Implementation of the Policy.