Stuart Nicholls is pushing to allow export exemptions for onshore gas projects.Strike hits out over consumer ‘cartel’Jack McGinnBy Jack McGinnMonday, 27 May, 2024 - 20:51 Category: Oil & GasGovernmentA key Perth Basin gas producer has hit back at the state’s major gas users for seeking to block LNG exports from onshore projects, accusing them of cartel-like behavour.Strike Energy chief executive Stuart Nicholls, whose company is currently producing from its Walyering project into the local market, has accused major gas players of behaving disingenuously after an alliance of gas customers launched a new campaign on Monday.Alongside Mineral Resources, Strike has been a key voice in the campaign to re-open a window which once allowed onshore producers to sell their gas as LNG abroad – abruptly shut by the Cook government in August last year.Mr Nicholls said the current system dictated where companies like Strike sold their gas – a setting he said created inequity for shareholders and disincentivised investment in the state.He lashed major gas customers for their vocal stance on the policy through the DomGas Alliance, which he labelled a “full-court press” following Monday’s campaign launch.“The DomGas Alliance communicating what they think both Strike and Mineral Resources should or should not be allowed to do with their natural resource is somewhat hypocritical, given no one is controlling the price of the products which they are turning this subsidised gas into,” he said.“There is a massive transfer of value from Strike shareholders to the shareholders of both Yara and Wesfarmers, who take our gas and look to convert it into explosives, and then sell those explosives on internationally indexed prices to domestic customers.“I’m not exactly sure why this group, the DomGas Alliance – which is ultimately behaving a lot like a buyer’s cartel – [thinks it] should be telling the state how to adequately monetise their resources.”Strike is among the most active companies in the Perth Basin, having successfully brought Walyering to production last year and working towards a government-supported gas acceleration strategy with the aim of bringing four gas fields to production by the end of 2026.Mr Nicholls said while the company had invested heavily in the region, it needed incentive and certainty to continue to build out on its reserve position.He claimed the current situation, where Strike is required to sell into the local market only, made investment attractiveness a challenge and limited Strike’s market.“Gas being linked to international prices allows the borrowing capacity of our assets to grow considerably, which allows us to borrow more money, which allows us to drill more wells, build more infrastructure, and be the most successful version of ourselves in order to support the state’s energy endeavours,” he said.Strike’s views echo those of MinRes, which has held off a final investment decision at its Lockyer gas project pending clarity over its ability to export LNG from the project.The domestic gas debate has reared its head over the past year, as the state’s supply equation tightens in the face of a changing energy market and following a state government policy tweak which ruled out LNG export exemptions for developers on the Perth Basin.Kerry Stokes-backed Beach Energy and its joint venture partner Mitsui E&P were granted an LNG export exemption for their Waitsia stage two project in the Perth Basin in 2020 by then-Premier Mark McGowan.The exemption window was closed by Roger Cook’s government in August 2023, dashing the hopes of natural gas aspirants who sought similar exemptions for their projects.Mr McGowan is now a strategic advisor to MinRes as it pushes to get the export window open once more.Mr Cook is understood to be weighing up a decision on whether to overturn the policy, and told an estimates committee hearing last week he was leaning away from allowing more exports in the state pending advice from the Department of Jobs, Tourism, Science and Innovation.Mr Nicholls told Business News he was confident the study by JTSI would find in favour of LNG export exemptions facilitating additional supplies of domestic gas.“Ultimately, the deployment of additional capital in the Perth Basin will facilitate more gas sooner, which will hopefully help the Domestic Gas Alliance allay their own concerns,” he said.A parliamentary report into the state of the domestic gas market in WA is expected to be tabled next month.The DomGas Alliance represents members including Cockburn Cement, Alcoa, Coogee Chemicals, CSBP, Tronox, Wesfarmers Chemicals, Energy and Fertilisers and Yara Pilbara.Combined, its member companies use around 60 per cent of the state’s consumed gas.Companies: Strike EnergyDomGas AllianceMineral ResourcesPeople: Stuart NichollsRelated Articles28 May 2024Strike's swift payback on Walyering
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