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Gas policy is working: Alinta boss
Gas policy is working: Alinta boss

One of the State's biggest industrial buyers of gas has broken ranks with other major local firms and declared the worst of WA's rising gas prices over.

Alinta chief executive Jeff Dimery, whose firm is a big buyer and seller of gas, said the State's policy of reserving up to 15 per cent of projects for domestic needs was finally starting to work to cap prices despite complaints about sky-high bills from other big gas buyers.

"The way I see the world when it comes to domestic gas prices is that WA has gone through an adjustment period over the past four years or so, and there has been a significant increase in the cost of gas but that has largely worked its way through now," he said.

"In WA, that's your domestic gas reservation policy coming in.

"The big issue in so far as domestic gas pricing is concerned in the Australian energy market now is to play out on the east coast."

States such as NSW do not have a gas reservation policy, and its manufacturers are up in arms as prices rise as their long-dated contracts begin to expire.

Gas-guzzling firms in WA complain that prices have jumped from as low as $2.50 a gigajoule in 2005, to as high as $12/GJ, despite the State having vast offshore reserves.

They argue this is because petroleum giants are focused on higher-priced exports, and they are given protection by the competition watchdog, the ACCC, to jointly market gas, which increases prices.

Producers argue their exploration costs are rising and the price of gas must reflect these costs, and that the WA industrial market is still too small to handle individual marketing from big gas fields. They add higher prices and reservation is bringing new supplies to market.

Mr Dimery's intervention is significant because he runs one of the few firms in WA that both buys and sells gas, so does not have a vested interest unlike most in the debate.

His comments have been given weight by recent gas contracts, where Verve Energy and Synergy bought future gas from Chevron's Gorgon project at about $6/GJ.

Mr Dimery made his comments after _WestBusiness _reported on Monday that Treasury warned rising gas prices would hit the bottom line of regional power generator Horizon Power.

But his comments failed to appease an alliance of major domestic gas users, representing firms such as alumina giant Alcoa.

In an opinion piece in the West Australian today, Domgas spokesman Gavin Goh says the reservation policy should be tightened and widened to the rest of Australia. GAS TO BURN 447.5 The estimated amount of gas in trillions of cubic feet in Western Australia. SOURCE: WA GOVERNMENT