Head of Apache’s Australian subsidiary Tom Maher has argued that instead of increasing available supplies for local gas suppliers, the policy is driving prices higher and stalling small and mid-size companies’ exploration projects.

“Our view is [the policy] has put a dampening effect on continued exploration of the North West Shelf, particularly for the smaller fields,” Mr Maher said.

Western Australia’s gas reservation policy mandates that 15 per cent of gas production from export projects must be retained purely for the domestic market.

Apache has said that smaller domestic gas suppliers are deterred from exploring new supply opportunities as, being aware of all the gas held by Chevron, Shell, and Woodside off Western Australia, they realise that some of those reserves must come ashore for the local market, effectively nullifying their exploratory ambitions.

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In contradiction to Apache’s views, DomGas Alliance has said that rather than dampening exploration and offshore development by small suppliers, the gas reservation policy has significantly increased exploration investment.

DomGas Alliance Executive Officer Gavin Goh said that there was no evidence to Apache’s claims that Western Australia’s gas reservation policy had negatively affected exploration ambitions of small suppliers, but had the opposite effect since the policy was introduced in 2006.

Mr Goh also said that the policy allowed for increased flexibility for large suppliers in establishing agreements to meet their onshore gas requirements, allowing for an influx of smaller suppliers to infiltrate offshore gas reserves.

Apache is set to commence production from its $A1.08 billion Devil Creek gas plant, south of Dampier, late next year. The project, Western Australia’s first new domestic gas supply in 17 years, is a joint venture with Santos. The project will make Apache the biggest gas supplier to the state, taking the mantle from Woodside Petroleum.