BEN HARVEY: Details scarce on Chris Bowen’s half-baked gas reservation plan

Chris Bowen, the man who has spent the past three years convincing us we don’t need fossil fuel, is trying to snaffle a fifth of the nation’s natural gas.

His spin doctors must be getting dizzy.

Bowen’s argument that the sun and wind don’t get held hostage in the Strait of Hormuz made for a pithy soundbite but was wanting when it came to solving the energy problem facing the country.

So, after demonising Big Oil for so long, he’s now getting in bed with the devil.

Our national energy policy is slipperier than a barrel of Castrol GTX.

The decision to force companies to send a portion of their exports to the domestic market each year emulates WA’s 20-year-old reservation law.

Both systems have the goal of pushing down domestic prices by boosting supply and de-linking local prices with the LNG market. There are differences though.

Where WA requires producers to quarantine for local consumers 15 per cent of production over the course of a project’s lifetime, Canberra wants the equivalent of 20 per cent of exports set aside for the local market each year.

The Albanese Government is saying exact details of how the policy will work, and in particular how it will rub up against WA’s own laws, are still being worked out. The Government believes it will firm up the policy by the end of next month.

They’re in for a few all-nighters because right now nobody seems to have a clue about how the system will work.

Bowen is telling the gas companies one thing, Federal Resources Minister Madeleine King another, and the bureaucrats charged with framing the policy are saying something different altogether.

There’s too much money on the table for this level of confusion. It’s something you’d expect in Africa, not Australia.

Take the plight of Japanese LNG business Inpex. The company spent $72 billion on its Ichthys project, which sees a gas field of north-west WA sent 900km to Darwin via the longest subsea pipeline in the world.

The Darwin LNG plant doesn’t have a large-scale domestic gas plant and even if it did couldn’t get the fuel to market because there is no pipeline to the east coast.

It will have to fulfill its 20 per cent obligation by buying gas from its competitors.

Reckon Woodside, Santos and Shell are going to give their direct competitor a good price?

Imagine spending that amount of money on a project that has a 40-year lifespan and a few years in having the financial goalposts moved on you.

Australia’s ambassador to Japan is going to be doing a lot of bowing over the next few weeks because this policy is screwing over Tokyo.

The Japanese Government has a direct 22 per cent stake in Inpex. Tokyo-headquartered JERA and LNG Japan are stakeholders in the Scarborough gas project while Japanese giants Mitsui and Mitsubishi own part of the North-West Shelf.

Japan Inc. is going to be furious, as will be the US.

California-headquartered supermajor Chevron spent close to $100 billion on the Gorgon and Wheatstone LNG projects in WA’s north. Both those facilities have domestic gas plants attached to them so they aren’t as exposed as Inpex but there are still headaches ahead.

Under the WA policy which currently governs Chevron, the company can deliver its 15 per cent obligation over the multi-decade lifespan of the fields it is drawing gas from.

The Federal plan requires gas every year, which could test the resilience of the domestic gas plants.

Chevron is close to the Trump administration. The President is relying on the company to commercialise Venezuela’s oil reserves.

How will Washington view a policy which could be interpreted as the quasi-nationalisation of a US company?

International relations aside, there’s also the problem of the Australian Constitution, the “vibe” of which dictates Federal legislation must be applied uniformly across the country.

King, who represents the WA seat of Brand, is confident the State regime can be preserved.

Lawyers and analysts reckon even Dennis Denuto could win the legal argument that it can’t be.

“The fundamentals of the Western Australia gas market are different to those of the east coast gas market,” King said.

“The WA gas reservation scheme has ensured the WA domestic market is well supplied and domestic prices are insulated from international price spikes.

“How the national scheme will apply in WA will be resolved during the next stage of design work.

“That work will consider interactions with state reservation policy. As a starting point, we anticipate that obligations for WA will count towards the national obligation.”

Respected oil and gas analyst Saul Kavonic had a clear message to any Federal politician keen to meddle in WA’s affairs — keep out.

“Western Australia is the only State with the foresight to have a properly working reservation policy, and is more than capable of managing their gas market themselves,” he said.

“WA doesn’t need the politicians who have overseen the east coast gas market debacle to bring their foolish ideas over to the west.

“By targeting WA, Federal Labor will be dragging Woodside, the entirety of Japan Inc, Exxon and Chevron, and by extension the Trump administration, into lobbying against it; a fight Canberra doesn’t need and would likely lose.”

Laws are like sausages — it’s best not to know what goes into them.

As it stands, the Federal reservation policy contains more lips and arseholes than any butcher shop in Canberra.