Australian Watchdog Approves Joint Marketing
Junior Australian gas producer Central Petroleum (CP) and the country’s largest investment bank Macquarie Group have been allowed in a draft decision by the competition watchdog to jointly market their Northern Territory gas. CP is operator and they have half each of the Mereenie oil and gas field, in the Amadeus Basin in the Top End.
“In order to allow the development of Mereenie gas as soon as possible, the [Australian Competition and Consumer Commission] has granted interim authorisation, which allows the parties to begin negotiating joint supply agreements with customers pending the ACCC’s final determination,” the watchdog said March 2.
The ACCC’s chairman Rod Sims said: “The ACCC’s preliminary view is that joint marketing is likely to encourage investment to increase gas production at Mereenie. 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.”
During a period of joint marketing, the two companies intend to develop new reserves at Mereenie, estimated at between 110-185 petajoules, by drilling two new wells at the field. CP and Macquarie intend to make an additional 15 PJ/year available for supply into the Northern Gas Pipeline – which links NT to the east coast market. The pipeline is expected to be finished in late 2018.
Sims said that the ACCC was “very mindful” of the east coast’s tight gas supply situation in granting the interim authorisation.
Generally, the ACCC prefers separate marketing as it results in more competitive outcomes, but in this instance it saw little “if any” public detriment as customers in the NT-Mount Isa region have the option of alternative sources of supply.
“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,” Sims said.
It has been a big week for CP. The ACCC interim decision comes a day after the company was awarded exploration permits for 77 km2 in Queensland’s Surat Basin by the state government.