Matt Kean pushes for national reserve on gas and coal

NSW Treasurer Matt Kean has urged Anthony Albanese to implement a national reserve on gas and coal, demanding WA provide discounted gas to the east coast.

Western Australia requires 15 per cent of its gas production for its market, keeping prices in the state well below the national average.

NSW Treasurer Matt Kean has urged Anthony Albanese to implement a national reserve on gas and coal, demanding that Western Australia dump its state policy and provide gas at a discounted price to the east coast.

Mr Kean said WA should participate in a national reservation scheme that would also affect the coal industry, broadening the push from Victoria for an east coast scheme for gas producers in Queensland.

With the federal government considering the insertion of a price provision in the gas export trigger and the industry code of conduct, Mr Kean said the Prime Minister should also design a fossil fuel reservation scheme that would bind all jurisdictions.

NSW Treasurer Matt Kean. Picture: Gaye Gerard

His proposal would set a level of gas and coal that producers have to supply locally ­before ­considering exports, with a goal of decoupling prices from the soaring international market.

WA requires 15 per cent of its gas production for its market, keeping prices in the state well below the national average.

“Just like WA wants NSW taxpayers to prop them up by taking our GST, NSW families expect WA to do their bit to support them during this energy crisis,” Mr Kean said.

“Clearly, a gas and coal reservation policy is required for the nation. WA should stop looking after themselves at everyone else’s expense.”

Mr Kean said gas extraction at Narrabri, in NSW’s northwest, would begin in 2025, conceding the process should have started sooner.

West Australian Premier Mark McGowan said Mr Kean was right to look at the state on how to fix the “east coast energy crisis”.

“However, it’s ridiculous to suggest WA is looking after ourselves at everyone else’s expense,” Mr McGowan said.

“Western Australia supported the NSW government during the pandemic by keeping our main export industries open and directly helping fund the massive bailout packages poured into NSW by the commonwealth.

“Sadly the NSW government allowed Covid to run rampant and therefore huge support packages were necessary. Obviously WA helps fund those.”

Mr McGowan said NSW “doesn’t have the import terminals or interstate pipelines to allow it to import gas from WA”.

“Rather than complaining, the NSW government should be copying Western Australia’s policies in relation to gas,” he said.

But Grattan Institute director of energy Tony Wood said there would be issues transporting LNG from WA to the eastern states.

“I don’t know how you would do that. Reserving gas in WA doesn’t help the east coast and reserving gas in the east coast doesn’t help WA,” he said.

“They are so physically separated. The only way of getting gas between them would be via an LNG tanker. Otherwise, they are completely separate market.”

Energy giant Woodside has suggested a “quick fix” of building a floating import terminal in Victoria’s Corio Bay that could accept gas from WA.

A planned LNG import terminal in the NSW town of Port Kembla could be completed by next year, while there are some experts who have pushed for a pipeline to connect the gas markets of WA and the eastern states.

Resources Minister Madeleine King on Monday talked down the potential for an east coast reservation scheme or a gas price cap.

A price provision in the export trigger would allow the government to cap gas exports – based on the advice of the Australian Competition and Consumer Commission – if prices offered to local users went above a prescribed level. On Tuesday, Jim Chalmers said regulation, rather than taxes or subsidies, was the first port of call for the government as it tackled the energy crisis.

“Can we do something meaningful on the code of conduct?” the Treasurer said.

“And can we include in that a consideration of price and not just supply? I think that’s the important next step that we’re working on right now.

“Our first priority is on the regulatory side. There is a code of conduct, which is voluntary.

“We’ve said we should look at ways to make it mandatory if we can, and that we need to involve considerations of price.”

Dr Chalmers said the government would consider advice from Treasury on increasing taxes on gas producers through the petroleum resource rent tax.