Colin Barnett has apologised to the traditional Aboriginal owners of James Price Point while hinting that the State Government could strip Woodside and its partners of their lease over the one-third of Browse gas in WA waters.
The Premier said yesterday that the $1.5 billion benefits package negotiated with traditional owners would not go ahead if the Browse joint venture partners did not bring gas onshore for processing at James Price Point.
"There won't be the benefits package and I hate to say that, but it's the reality," Mr Barnett said.
"I don't apologise for trying as hard as I could to get this project to occur onshore but I apologise to the Aboriginal people for not succeeding."
With the joint venture tipped to pursue floating LNG technology to unlock about eight million tonnes of gas a year, Mr Barnett indicated he was prepared to play hardball to ensure gas was processed onshore to underpin WA jobs and royalties.
"It should not be assumed that the retention of Commonwealth leases automatically means the same treatment of State leases," Mr Barnett said in a pointed warning about the one-third of Browse gas located in State waters.
"We will look at this project - if it goes offshore, if that's what the proponents want - entirely from square one. I'm just making the point and I hope the companies listen, don't assume anything."
The retention lease of the WA gas expires in November next year.
Mr Barnett cited research from the Department of State Development and Citigroup that onshore processing at James Price Point would deliver the Browse partners a profit margin of 11 per cent versus 13.1 per cent for a floating LNG operation.
"No one's making a loss here," Mr Barnett said. "If the margin's that narrow, I would have thought the good thing to do for this country would be to sit down and work out how you close that gap."
Mr Barnett said that one way would be to negotiate a project- specific agreement with the unions to get cost certainty. He said the risk of construction blowouts onshore had to be weighed against cyclone-related shutdown and safety risks associated with FLNG.
Wayne Bergmann, who negotiated on behalf of Aboriginal people with Woodside and the Government, said the $1.5 billion benefits package should be paid in full whether the project went ahead or not because the Goolarabooloo and Jabirr Jabirr people negotiated the deal under pressure and the threat of compulsory land resumption.
Opposition Leader Mark McGowan said the Government should hold up its end of the bargain if it went ahead with the land acquisition.
Mr Barnett said a decision would not be made on the land until a Federal environmental approval decision and formal final investment decision by the joint venture partners were made.
Woodside declined to comment yesterday.