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ACCC authorises maintenance coordination by Australian LNG producers

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LNG Industry,

The Australian Competition and Consumer Commission (ACCC) has released a statement claiming that it has authorised Australia Pacific LNG Pty Ltd, Gladstone LNG (GLNG) and the Queensland Curtis LNG project to discuss their maintenance schedules, maintenance techniques and maintenance providers.

Rod Sims, the Chairman of the ACCC, said: “Coordinating the maintenance undertaken at these facilities will increase the efficiency of these events and reduce the likelihood of major disruptions to domestic gas markets, which could occur if multiple maintenance events at the Applicants’ facilities overlap.”

Each project’s facility is connected to gas wells in the Surat and Bowen basins of Queensland Australia, but they also buy gas from local wholesale markets. When the facilities are offline, they are able to redirect their gas to such wholesale markets for sale. As the facilities use such large quantities of gas, they can have a significant effect on the market price when their facilities are offline. Wholesale traders of gas have voiced concerns that coordination between the facilities would allow them to trade advantageously in gas markets, because each facility will know when the other is going to be offline, due to maintenance.

Therefore, the ACCC has stated that all shared maintenance schedule information must be publicly disclosed.

Sims said: “These LNG producers can create significant volatility in domestic gas markets when they go offline for maintenance. This condition allows all market participants to know when maintenance is going to occur and to make sure that they aren’t exposed to unnecessary risk.”

The Australian Energy Market Commission (AEMC) produced a draft recommendation that LNG producers should have to publish two-year forecasts of their facilities gas demand and capacity, as well as any scheduled downtimes. However, the ACCC decided that this was not appropriate.

Sims said: “Information is a crucial component for creating efficient, well-functioning markets and we understand why market participants want these LNG producers to provide more detailed information to all gas market participants. The AEMC is closely scrutinising the appropriate level of information these LNG producers should be required to provide to the market, and the ACCC considers that the AEMC’s review is the appropriate forum to assess these broader information transparency issues.”

Authorisation is granted for five years instead of the longer periods, which were sought by the LNG producers.

Edited from press release by David Rowlands

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