Ryan Stokes warns of high energy prices if the Albanese Government doesn’t follow WA’s domgas reserve policy

The Federal Government’s proposed domestic gas reservation policy will push up energy prices in the long-term, prominent businessman Ryan Stokes warns, as he urges Canberra to take a leaf out of WA’s book.

Mr Stokes, the chief executive of major conglomerate SGH, said a proposed blanket rule forcing all Australian liquefied natural gas exporters to set aside 20 per cent of production for the domestic market would make the average household worse off in the long run.

WA’s gas reserve policy in comparison does not force LNG operators without onshore infrastructure to supply the domestic market, which Mr Stokes said leads to a more “balanced” market dynamic that benefits both producers and consumers.

The Albanese Government claims its proposed domestic gas reserve policy will boost local supply and therefore lower energy prices.

But reputable global analysts like Wood Mackenzie predict it will make many gas projects economically unviable, reducing future supply and consequently creating higher energy prices over time.

SGH owns building materials manufacturer Boral, which stands to benefit from cheaper gas prices. But Mr Stokes suggested any positives from the reservation policy would only be a sugar hit.

“In a Boral context, yes, you’d love cheap prices, but you want reliable supply of gas first and foremost because we want to be operating in the sector for decades, not five years or ten years,” he told The West Australian.

“It’s not in the national interest to go and have a short-term relief on price at a long-term detriment to the reliable supply of that resource.

“You’ll have that loss of the domestic sector, which has been investing in gas for decades, and once the LNG projects wind down you lose that domestic supply.”

Ms Stokes said he believed households were unlikely to receive any benefit from the domestic gas reservation policy, even initially.

“Very few domestic gas users access the wholesale domestic gas price because most of them get it through [energy] retailers, which have a tremendous markup as is . . . it’s the large-scale multinational manufacturers who have access to the wholesale market,” he said.

Mr Stokes’ comments came a day after SGH provided its submission to the Federal Government in response to the proposed domestic reservation policy.

SGH owns a 15.5 per cent interest in the Crux LNG project off WA’s north west coast. Crux’s production will feed into Shell’s massive Prelude floating platform.

Crux would be forced to send 20 per cent of its output onshore under the Government’s proposed policy, even though there is no infrastructure linking it — or Prelude — to the domestic gas supply chain.

Mr Stokes urged the Albanese Government to adopt the “nuance” underpinning WA’s gas reservation policy, which only obligates onshore producers to supply the domestic market.

“The WA regime has worked exceptionally well over decades, and it’s been a scheme where you look at the gas prices in WA, it’s been balanced and reasonable,” Mr Stokes said.

Gas is about half of the price in WA compared to most of the East Coast market.

SGH is a 20.3 per cent shareholder of Southern Cross Austereo, which owns The Nightly and The West Australian.