24/06/2009 - 16:00

ACCC allows joint gas sales from Gorgon

24/06/2009 - 16:00

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The competition watchdog has allowed the Gorgon partners to jointly test the domestic gas market ahead of a final investment decision expected in the coming months.

ACCC allows joint gas sales from Gorgon

The competition watchdog has allowed the Gorgon partners to jointly test the domestic gas market ahead of a final investment decision expected in the coming months.

The Australian Competition and Consumer Commission (ACCC) said in a statement today that it had granted conditional, interim authorisation for the Chevron-led project partners to engage with potential customers.

The interim approval will upset some domestic gas users with the DomGas Alliance - which counts Alcoa, Fortescue Metals Group and Burrup Fertilisers as members - previously saying it strenuously opposed the move.

In its submission to the ACCC earlier this month, DomGas said joint marketing of the Gorgon gas would be anti-competitive and further extend a cartel arrangement with partners Chevron and Shell also participants in the North West Shelf Joint Venture.

Today's ACCC conditional approval would allow the partners to obtain information relevant to their final investment decision "while the ACCC assesses the substantive applications for authorisation".

"The ACCC accepts that the joint venture participants need to engage with the market before making a final investment decision in relation to this major capital investment," the ACCC said.

ACCC chairman Graeme Samuel said the interim authorisation was "unlikely to result in irreversible changes to the market, particularly since any gas sales agreements entered into ... will be conditional on the ACCC granting final authorisation".

The ACCC said several interested parties had raised concerns about providing commercially sensitive information to the joint venture partners under an interim authorisation.

The authorisation would "only come into effect once the applicants have had their ring-fencing arrangements independently audited and any changes required to make them effective has been implemented".

The ACCC said it could review the interim authorisation at any time and that it should not be presumed that final authorisation would be granted.

A draft determination is expected in September.

Other joint venture participants are Mobil and Shell, both with 25 per cent stakes.

Chevron earlier this month invited domestic gas users to reserve supply from the $50 billion Gorgon project as a final investment decision was expected in the second half of this calendar year.

But it may take many years for the Gorgon project to adhere to the state's domestic gas reservation policy, which sets aside 15 per cent of a gas project's output for local users.

The remainder is destined for overseas liquefied natural gas markets.

First gas production at the massive Barrow Island-based project is expected in 2015.

 

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