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Gas still not competitive

WHILE Australian gas reform to date has focussed on the mid and downstream sectors of the industry, gas supply is still not seen as particularly competitive.

The Australian Competition and Consumer Commission believes this situation needs addressing.

In a speech to a PriceWaterhouse-Coopers WA energy briefing, ACCC chairman Allan Fels said the provision of pipeline access and retail contestability had been achieved through reforms but the upstream gas supply sector was still a matter of concern to the commission.

However, he did say it was less of an issue in WA, principally due to the number of different joint ventures selling gas.

“The significant reserves of gas discovered by a number of these joint ventures also promotes greater competition,” Professor Fels said.

“Nevertheless, the Commission considers that, where possible, separate marketing of gas from the various producers within these joint ventures is preferable, to create a significantly larger number of sellers in the market.

“In granting authorisation to the North West Shelf Project, the Commission accepted the arguments of the applicants that separate marketing in the WA gas market at the time was infeasible, principally due to a lack of depth in the market,” he said.

“The Commission does believe that the market here can continue to evolve over time and will be capable of supporting separate marketing in the future.

“As in electricity, the key to having gas markets working well is to have appropriate structural separation, with competition continuing to develop in the upstream sector and barriers to entry removed to allow competition in the retail sector,” he said.

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