The Conversation : Australia: Calls for a gas reservation scheme is protectionism in disguise

Queensland is poised to become a major export hub for liquefied natural gas (LNG). Given the West Australian experience, where LNG is already exported to Asia, this will cause domestic gas prices to rise. According to the DomGas Alliance, a group of Western Australian energy users, “gas prices have risen sharply from $2.50 per gigajoule in Western Australia to $8/GJ”.

The overseas price of LNG is currently well above the price of natural gas in eastern Australia. Gas producers will only sell locally if the domestic price rises to the export parity level – the overseas price that exporters receive less the cost of exporting. So prices in eastern Australia are rising towards export parity.

Fearing this price rise, major energy users, such as DomGas, have called for domestic gas reservation. Their report stated: “Australia should implement a national reservation policy that would require major LNG projects to set aside 15% of gas production for local industry and households”. MORE