Gorgon partners likely to evade gas scheme

THE Gorgon partners may be able to dodge the Western Australian Government’s gas reservations plan if they can show that selling gas to the domestic market is not commercially viable.
Gorgon partners likely to evade gas scheme Gorgon partners likely to evade gas scheme Gorgon partners likely to evade gas scheme Gorgon partners likely to evade gas scheme Gorgon partners likely to evade gas scheme

In the course of the current debate over gas reservations, Premier Alan Carpenter has said a gas reservation policy was not new in WA, and the said Gorgon’s statutory obligations would compel the partners to provide domestic gas.

“Therefore if the Gorgon development proceeds, the state government can guarantee there will be gas available for the domestic market,” he was quoted as saying the West Australian newspaper.

Under a contract signed three years ago, the Chevron-led joint venture agreed to set aside 2000 petajoules of gas from the $11 billion project for use in the state. But this only applies if the sales are "commercially viable".

The contract states that the sale of gas within WA must generate a “commercial rate of return” that would be considered acceptable by any reasonable project developer or investor.

This prompts the question, would any reasonable developer or investor want to build a pipeline from Barrow Island to the WA mainland in order to sell gas for a considerably lower price than it could fetch as LNG on overseas markets?

The Gorgon partners are Chevron Australia (50% and operator), Shell Developments Australia (25%) and ExxonMobil (25%).

Carpenter’s proposal to reserve up to 20% of gas from liquefied natural gas projects for the domestic market has prompted concerns by the Federal Government that it could drive away investment and reduce exploration in the state.

But Australian Resources Minister Ian Macfarlane has reaffirmed that the WA Government would not be able to impose gas reservations on projects whose gas reservoirs and processing facilities were based in Federal waters.

In addition, Carpenter said that the State Government would not impose blanket gas reservation quotas on projects, but would vary the levels reserved in order to ensure that projects remained viable.

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