Premier Mark McGowan has defended a 2020 decision to exempt a major onshore gas project from an export ban as Western Australia stares down the barrel of years of gas supply issues.
McGowan also denied he discussed the export ban exemption of Beach Energy and Mitsui joint venture’s Waitsia gas project with one of Beach’s major shareholders, Kerry Stokes or his son Ryan.
WA Premier Mark McGowan exempted the Waitsia gas project from an export ban in 2020.Credit: Alex Ellinghausen
In August 2020, McGowan announced a new ban on the export of gas extracted from onshore wells to shore up gas supply and keep energy prices in the state down. But Waitsia was given an exemption to export 50 per cent of the reservoir over five years through Woodside’s ageing Karratha Gas Plant.
The decision raised industry eyebrows at the time as it created an unfair playing field, greatly benefitting Japanese-owned Mitsui and Beach Energy shareholders, including Stokes, who now has a 30 per cent stake in the business.
Now the Australian Energy Market Operator has revealed that a gas shortage predicted to occur between from 2023 to 2026 will coincide with the period Waitsia sends its gas overseas.
A graph included in AEMO’s gas statement of opportunities released Thursday shows that WA would continue to have ample supply of gas until at least 2029 if Waitsia’s export gas was added to the state’s energy mix.
The gas policy was announced at the height of the COVID-19 pandemic and the decision was made to hasten the investment decision on Waitsia, which would create 200 jobs during construction.
When questioned on Thursday, McGowan said he didn’t understand criticisms of the decision, which was made when it was predicted the economy was going to crash.
“It’s all well and good now to … look back on it and say, ‘You shouldn’t have done this or that’. That’s the situation that we were confronting as a state, and we saw was happening in Victoria and New York and Italy and Iran and Britain,” he said.
“Millions of people dying, literally, in advanced Western countries, economies crashing, a world in chaos, and so we did what we had to do on the circumstances, and we got a major project that gives us 50 per cent gas, not 15 per cent gas [reservation policy that applies to offshore gas].”
Documents obtained under freedom of information laws by WAtoday in 2021 revealed the domestic gas policy was shoehorned into the COVID-19 recovery narrative between July and August 2020.
Partly because of the exemption announcement, Beach Energy’s shares rose 6.8 per cent in a day, netting Stokes about $65 million.
That jump prompted questions about whether McGowan discussed the policy with the media mogul or his son, Seven Group chief executive Ryan Stokes, which the premier refused to answer.
A spotlight was shone on McGowan’s personal relationship with Kerry Stokes during the Clive Palmer defamation trial earlier this year, where text messages revealed in court showed they joked about front pages on The West Australian depicting Palmer as a toad and cockroach.
The messages also revealed McGowan alerted Stokes to significant legislation thwarting a multibillion-dollar compensation claim by Palmer against the state minutes before it was tabled in parliament – days before the gas policy was announced.
On Thursday, McGowan denied he spoke to Stokes or his son about the gas policy or Waitsia’s exemption.
“No, to the best of my recollection, no,” he said.
“You’re talking about issues of a few years ago. We got a major project up that’s giving us 50 per cent of the gas from it and hundreds of jobs and security in the gas supply.”
Waitsia’s Stage 2 project will cost about $770 million and produce about 250 terajoules of gas a day. Construction began in October last year.
In a statement, Mitsui said the decision to proceed with Stage 2 was made possible thanks to the export exemption.
“The domestic contribution from the Waitsia Gas Project Stage 2 will supply the WA domestic market at a time when the Australian Energy Market Operator is currently predicting an increase in demand,” the statement said.
“As the AEMO Gas Statement of Opportunity notes, the contribution from Waitsia Stage 2 will be larger than previously expected at 125 terajoules a day as opposed to the previous forecast of 100 terajoules a day.”