WA Govt Gas Policy Report Today, page-133

I was really pleased with the interim report. The purpose of the interim report is float out the identified issues and gauge responses to potential solutions. The media responses have been supportive, I am yet to see any criticism of what was released.

Key statement - "no longer fit for purpose"
Outcome - there will be change, tick

To predict the level of change, and Cook references are indicative IMO, the key document is the WA GSOO. The bottom line is if action isn't taken now, significant substantial shortfall will occur in due course. Price rises, blackouts, and probable closure of industry leading to loss of jobs will likely occur.

Two levers are available to Cook. First lever, tIghten up legislation to ensure the offshore 15% actually flows into the domestic market which the report infers is not currently happening. Avoidance, back-ending, and other grey areas need to be eliminated. But is it enough? AEMO suggests not. Hence Cook will need to use the second lever, increase onshore production with an export concession to PB producers. Why?

Two primary reasons, increased demand from (1) shift from coal/diesel to gas, and (2) new business.

A case study for reason 2:-

ICT close their Queensland Urea plant citing inability to secure a long term affordable GSA.
Perdaman look to develope a new Urea plant in NSW with feedstock proposed from Santos/Narrabri
Outcome - Narrabri yet to reach FID, Perdaman walk from NSW to WA, ICT signs offtake from Perdaman.

Winner - WA (new investment, jobs, GDP, tax revenue)
Losers - QLD and NSW

What MIN proposed was tough but ultimately fair. It's blackmail but the sweetener of covering a shortfall, plus influence of McGowan, will get their proposal across the line.
STX? I take the view MIN won't get an exemption, the policy change will be across the board. If we look at the current landscape, MIN currently does nothing to support domestic demand. In fact, their position is that none of LD will be available domestically if an export concession is not granted. STX has Walyering in production supporting domestic demand plus other GSA's in place to meet domestic demand. STX has a watertight case to be included in a future easing of onshore policy. JMO.