QLD LNG producers reauthorised to coordinate gas plant maintenance

The ACCC has reauthorised Australia Pacific LNG Pty Ltd, Gladstone LNG, and the Queensland Curtis LNG Project to coordinate their maintenance schedules, providers, and techniques for another five years.

“The reauthorisation means that all three gas plants can coordinate when their facilities will be taken offline for maintenance,” ACCC Chair Rod Sims said.

“This will reduce the likelihood of major disruptions to domestic gas markets, which could occur if multiple maintenance events cause more than one facility to be taken offline at the same time.”

The LNG producers’ facilities convert natural gas into LNG for export. Each LNG facility is connected to gas wells in the Surat and Bowen basins of Queensland. However, they also purchase gas from nearby wholesale markets.

When any of the applicants’ LNG facilities are offline, they may redirect their gas to wholesale markets for sale. The LNG plants use very large quantities of gas and their facilities going offline can have a significant effect on the market price.

The ACCC first authorised maintenance schedule coordination in 2016, with a condition requiring that applicants publicly disclose the information they share between themselves, to ensure that other market participants do not have an information disadvantage.

The ACCC considered whether transparency measures expected to be implemented under the National Gas Law in 2022 would remove the need for a similar condition in this authorisation, but has decided a condition is still appropriate.

“We consider that all information shared among these producers should be disclosed to the rest of the market, whereas the National Gas Law has a different focus and may not apply to information about maintenance planned more than 12 months in advance,” Mr Sims said.

The ACCC’s final determination is available on the public register at Australia Pacific LNG Pty Limited & Ors.

Note

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.

On 5 May 2021 the ACCC issued a draft determination proposing to re-authorise the arrangements, including with a condition about information disclosure. As the Applicants’ existing authorisation was to expire on 6 May 2021, the ACCC decided to grant interim authorisation, subject to the same condition as in 2016, to enable the arrangements to continue while the ACCC considered the substantive application.

More information on the National Gas Law and National Gas Rules is available from The Australian Energy Market Commission (AEMC).

Background

In 2016, wholesale gas traders raised concerns that coordination between LNG producers would give producers an advantage in trading in gas markets, because each would know when maintenance is going to occur.

To address this, the ACCC imposed a condition of authorisation requiring the LNG producers to publicly disclose maintenance schedule information that they share with one another. The condition was formulated following consultation with the LNG producers and market participants including gas retailers.

New gas transparency measures which would require the applicants to report scheduled maintenance events, as currently takes place under the condition, are expected to be introduced under the National Gas Law by the end of 2022.

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