DomGas has disagreed with claims that a Queensland reservation policy could discourage exploration and investment, increase Queensland’s sovereign risk, reduce its attractiveness as a place to invest or constitute unwarranted market intervention.

The Alliance has said that the reservation policy in Western Australia has not prevented major gas producers from continuing to invest in new development and LNG projects, and exploration activity in the state had in fact significantly increased since the introduction of the 15 per cent reservation policy in 2006.

Despite this, DomGas has cautioned that Queensland’s domestic gas obligations should be made unconditional and not subject to a ‘commerciality’ escape clause, and that LNG producers should be given sufficient flexibility in how they can meet their domestic supply needs.

It has also advised that domestic supply should increase with any future expansion in gas reserves or LNG exports, and that the reservation commitment should be applied to both reserves and production, with domestic gas to be supplied no later than LNG start-up and not unduly delayed.

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DomGas has said that an effective domestic reservation policy would support energy security, while promoting investment, development and employment growth in Queensland for decades.

Meanwhile, Cougar Energy has said that the company has the potential to supply gas via underground coal gasification (UCG) to the Queensland domestic market.

The Queensland Government has previously issued a discussion paper outlining the future for LNG in the state, and the measures Queensland will take to develop the natural gas industry. One issue addressed in the paper was the lack of certainty about the availability of gas in Queensland’s domestic market.

Cougar has pointed to the UCG resources it controls, particularly at Wandoan in Queensland’s Surat Basin, and says that they have sufficient gas to meet the state’s needs.