Wesfarmers wages gas supply war on Woodside

afr.com:

Wesfarmers has singled out Woodside Energy in an escalating row over domestic gas supply in Western Australia, warning the situation in the state is putting investment in critical minerals processing at risk.

In a submission to a parliamentary inquiry, Wesfarmers raised concerns some gas suppliers are deliberately delaying the development of new fields in the hope of achieving higher prices. Its industrials and chemicals division is being offered gas at prices exceeding the $12 a gigajoule east coast price cap.

Wesfarmers is the fifth largest natural gas consumer in WA. Carla Gottgens/Bloomberg

The WA parliamentary inquiry is looking at whether its much-vaunted domestic gas reservation policy – which compels big offshore LNG players like Woodside and Chevron to feed 15 per cent of gas production into the local market and bans exports by onshore producers – is working.

Woodside “continues to act in accordance with the commitments in our various agreements with the state government”, it said.

Woodside’s vice president of Australian operations, Liz Westcott, predicted gas shortages in WA would become “increasingly inevitable” unless new LNG projects, including Woodside-operated Browse, went ahead.

“The state government can ensure adequate availability of domestic gas into the future by providing stable policy and regulatory settings that facilitate the timely development of new energy supply,” she said.

Older agreements provided flexibility by requiring 15 per cent of LNG export volumes be delivered to the domestic market over the life of a project, but newer arrangements require the 15 per cent to be maintained over the project’s life. That flexibility allowed LNG producers to cash in when export prices were high by