ACCC authorises LNG coordination

The Australian Competition and Consumer Commission (ACCC) has authorised Chevron, Shell, INPEX and Woodside to coordinate LNG maintenance activities in WA and the NT.

According to the ACCC, the four LNG producers compete for a limited pool of skilled contractors and specialised equipment to conduct scheduled maintenance.

“LNG producers can now schedule maintenance together without risking breaching competition laws, reducing concurrent work at their facilities. This will improve efficiency and maximise LNG production,”? said ACCC Chairman Rod Sims.

The producers’ facilities convert natural gas into LNG for export, with some also supplying, or have the ability to supply, natural gas to wholesale domestic markets.

“If producers become aware of each other’s LNG facility shutdowns as part of this agreement, this information might give them an advantage in gas trading markets,”? said Mr Sims.

To address this, the ACCC has imposed a condition of authorisation requiring the LNG producers to publicly disclose maintenance schedule information that they share with each other. A similar condition applies under an authorisation granted to LNG producers in Queensland in 2016.

“Information is a crucial component for creating efficient, well-functioning markets. Market-sensitive information disclosed to competitors as part of this process should be available to all participants,”? said Mr Sims.

Authorisation is granted for five years, rather than the 10-year period sought by the LNG producers.

“With the evolving nature of the gas markets, there is significant uncertainty about the impact of the proposed conduct on related markets. If the parties wish to seek reauthorisation in 2023, the ACCC will test whether the expected benefits and detriments have arisen and to assess the effectiveness of the condition,”? said Mr Sims.

The Gorgon, Wheatstone, North West Shelf and Pluto LNG facilities in Western Australia are operational, while the Prelude LNG facility off the Western Australian coast and the Ichthys LNG processing facility are expected to be operational in 2018.

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