The ACCC has today issued a determination allowing joint marketing arrangements between the four owners of the Mereenie gas field in the Northern Territory. It is located in the Amadeus Basin, approximately 250 km west of Alice Springs.
Central Petroleum, Macquarie Mereenie, New Zealand Oil and Gas, and Cue Energy are currently the joint venture partners in the field.
ACCC authorisation of the arrangements permits joint venture participants to jointly market gas from the Mereenie field until February 2027. Within this period, they can enter into gas supply agreements with customers on common terms and conditions that could operate up to February 2032.
“Australia’s competition laws generally require businesses to act independently when deciding who to sell to, but the ACCC may grant an authorisation if it’s satisfied that the likely public benefit outweighs any likely public harm,” ACCC Commissioner Stephen Ridgeway said.
“In the case of Mereenie gas, joint marketing arrangements will likely reduce transaction costs and encourage investment to increase gas production, which will facilitate gas being brought to market sooner.”
“Separate marketing of gas is generally preferable as it results in more competitive outcomes; however, the volume of gas produced at this field is relatively small, and demand in the NT-Mount Isa gas market is mostly met by a small number of large contracts. For these reasons, separate marketing is unlikely to result in significant competition benefits,” Mr Ridgeway said.
“Gas users in the NT-Mount Isa region have the option of alternative supply from sources such as the Power and Water Corporation in the NT’s Blacktip Field, the Cooper Basin, and potentially the Galilee Basin.”
“The presence of alternative suppliers limits the risk of the Mereenie joint venture offering its gas at higher prices, or on less flexible terms,” Mr Ridgeway said.
The ACCC issued a draft determination on 19 November 2021 and interim authorisation on 7 October 2021.
The determination is available on the ACCC public register at Macquarie Mereenie & Ors.
Central Petroleum Limited (ASX: CTP), Macquarie Mereenie Pty Ltd, Central Petroleum Mereenie Pty Ltd (as trustee for the Central Petroleum Unit Trust), New Zealand Oil and Gas Limited (ASX: NZO) and Cue Energy Resources Limited (ASX: CUE) are joint venture partners at the Mereenie oil and gas field.
Since the ACCC’s previous 2018 authorisation for joint marketing of gas, there has been an expansion of the Mereenie field, and growth in the joint venture’s sales that now extends to customers in Mt Isa and beyond.
Joint marketing will apply only to the sale of gas produced at the Mereenie field, not to gas produced from other fields owned or operated by participants in the Mereenie joint venture.
The gas to be jointly marketed from the Mereenie field accounts for approximately 20 per cent of the gas supplied to the Northern Territory and Mt Isa regions, and less than one per cent of gas supplied to the east coast gas market.
ACCC authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010.
Broadly, the ACCC may grant an authorisation when it is satisfied that the likely public benefit from the conduct outweighs any likely public detriment.