APPEA Warns Expansion of WA Gas Reservation Policy Would Destroy Jobs

The Australian Petroleum Production and Exploration Association (APPEA) said Wednesday that any expansion of Western Australia’s gas reservation policy would destroy jobs and investment in regional communities, undermine the state’s finances and reduce the volume of gas available for local use.

Brendon Grylls, the new National Party Leader in the Parliament of Western Australia (WA), confirmed earlier that he wanted to change the existing gas reservation policy.

"The only change that should be contemplated is the complete removal of the policy … Reservation is effectively a tax on gas production. It undermines energy security by discouraging the investment needed to increase gas supply and put downward pressure on prices," APPEA Chief Operating Officer (COO) -- Western Australia Stedman Ellis said Wednesday in a press release.

He noted that Western Australian gas producers are already struggling with low commodity prices and the imposition of additional costs on operations would undermine their global competitiveness and raise serious sovereign risk questions for the state.

"WA cannot afford to damage its hard-earned reputation as a reliable supplier of natural resources and a safe destination for global investment."

Instead, Ellis urged the WA Nationals to focus on policies that encourage investment in gas production.

"New gas projects are good for regional, state and national economies. They provide jobs and investment, taxes and royalties and much-needed export revenues," APPEA COO -- Western Australia emphasized.

In addition, Ellis said "forcing more gas into an already over-supplied domestic market in WA will also undermine investment in the onshore gas industry, which pays royalties directly to the State Government."

"There is a very good reason credible, independent bodies such as the WA Economic Regulation Authority, the ACCC and the Productivity Commission have all warned against gas reservation -- the economic costs far outweigh any perceived benefits."

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