The West

Apache Energy has reignited the debate over the State's high domestic gas prices, with the US petroleum giant revealing that WA is now its second-most lucrative market in the world.

Latest second-quarter figures from the Houston-based Apache show the average price it achieved from domestic gas sales in WA was $US4.41 ($4.18) per thousand cubic feet of natural gas (roughly equivalent to the local standard of a gigajoule).

An oversupply of unconventional shale gas in the US and Canada, which has also hit BHP Billiton, saw Apache's unhedged prices in North America slump to $US2.27/mcf from $US4.47/mcf a year earlier.

Apache's Egyptian operations also experienced falls, with the ageing North Sea fields off the UK coast the only Apache market to outpace Australia's prices.

The company defended itself yesterday against allegations of price gouging by an alliance of gas- hungry companies in WA.

"These prices reflect the average of gas sold under all of Apache's Australian gas contracts," Apache spokesman David Parker said.

"These now include the new domestic gas capacity at Apache's recently commissioned Devil Creek gas plant. Domestic gas prices also reflect the higher unit cost of exploration and project development costs in bringing new fields into production."

DomGas Alliance spokesman Gavin Goh said the average price understated higher current prices being charged to WA businesses of up to $10 a gigajoule.

"It makes no economic sense that Australia with its competitive advantage in energy now has some of the highest gas prices in the world," he said. "This is having a huge impact on manufacturing, jobs and household energy bills."

Apache's WA gas prices are likely to rise even further in coming quarters, as it recently won a five-fold jump in its key contract with ammonia producer Yara Pilbara.

It is also said to have a rich contract with CITIC Pacific's yet-to-produce Pilbara magnetite mine.

The Australian chief of US giant Dow Chemical said in February it was a travesty lucrative Asian export markets were dragging local prices higher, and more should be done to provide cheap gas to spur local industry. But the petroleum industry says higher exploration costs are driving up prices, and gas producers should not be forced to subsidise manufacturers.

Apache and partner Santos completed the Devil Creek plant in February. It will eventually supply about 20 per cent of the State's current usage

Apache is also a partner in the next domestic gas plant slated for WA, the $US1.5 billion BHP Billiton-led Macedon venture which is similar in size to Devil Creek and due for completion next year.

The West Australian

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