ACCC proposes joint marketing of NT gas

Beetaloo, Santos, gas, Origin, Karratha gas

The Australian Competition and Consumer Commission (ACCC) has released a draft determination proposing to authorise joint gas marketing arrangements between Central Petroleum and Macquarie Mereenie.

Central and Macquarie are joint venture partners at the Mereenie oil and gas field, located in the Amadeus Basin in the Northern Territory, approximately 250km west of Alice Springs.

In order to allow the development of Mereenie gas as soon as possible, the ACCC has granted interim authorisation, which allows the parties to begin negotiating joint supply agreements with customers pending the ACCC’s final determination.

Central and Macquarie propose to jointly market gas produced from the Mereenie field and give effect to gas supply agreements with customers with common terms and conditions including price.

The companies have applied for authorisation through the ACCC because without it, the joint marketing arrangement would likely breach competition laws.

“The ACCC’s preliminary view is that joint marketing is likely to encourage investment to increase gas production at Mereenie,” ACCC chairman Rod Sims said.

“Bringing forward new gas supply benefits the public, particularly once the Northern Gas Pipeline links the Northern Territory to east coast gas markets for the first time later this year.

“Supply of affordable gas available for east coast customers is tight, particularly in southern parts of Australia which is putting significant pressures on consumers and businesses.

“We were very mindful of this in granting interim authorisation.”

Where commercially viable, separate marketing is generally preferable as it results in more competitive outcomes.

However, in this instance, the ACCC identified minimal, if any, public detriment resulting from time-limited joint marketing.

Customers in the NT-Mount Isa region appear to have the option of alternative sources of supply, such as Power and Water Corporation from the Blacktip Field in the NT, and suppliers from the Cooper Basin and potentially the Galilee Basin.

“These alternatives are likely to constrain Central and Macquarie if they were to attempt to offer their gas at higher prices or on less flexible terms,” Mr Sims said.

The ACCC proposes to grant authorisation for the parties to engage in joint marketing for three years.

Any agreements entered into during that period must end no later than December 31, 2028.

The ACCC has invited submissions from interested parties on the draft determination before it issues its final determination.