ACCC requests gas inquiry input

The Australian Competition and Consumer Commission (ACCC) has released an issues paper seeking submissions to assist its inquiry into the East Coast gas market.

Some of the key issues outlined in the paper include the impacts of LNG export gas on gas flows and the domestic gas industry; rising domestic gas prices and changes in non-price terms; access to infrastructure; and pipeline development and access to capacity.

The ACCC inquiry will consider the competitiveness of wholesale gas prices and the structure of the upstream, processing, transportation, storage and marketing segments of the gas industry.

LNG developments

With reference to the impact of LNG developments on the Australian gas industry, the issues paper will explore, and seek comments on, the following:

• For the LNG projects under development in Eastern Australia to operate at capacity, gas production will need to almost triple from a current level of around 700 petajoules to almost 2000 petajoules later this decade.
• Gas supply is being increasingly directed to meet this demand. The effects of these changes, and uncertainties about the supply and demand dynamics in Eastern Australia, appear to be flowing through to domestic negotiations for the supply of gas.
• The ACCC is seeking to understand whether changes vary by location and if these affects are likely to be temporary and transitional or sustained and transformational for market participants.

Comments

Chairman Rod Sims noted: “Since the inquiry commenced on 13 April 2015, the ACCC has been engaging broadly to hear firsthand issues and concerns of participants in the East Coast gas market. Gas users, for example, have suggested that there are difficulties in gaining offers to supply gas, and they feel that this is evidence of a non-competitive market.

"Conscious of the reviews to date, the ACCC is seeking specific examples of conduct, negotiations and market practices that show the operation of the market during this time of transition. These could go to issues such as difficulties in obtaining gas, deteriorating non-price terms and conditions, or increases in price.

"The issues paper forms part of the ACCC inquiry process. Other tools include continuing consultation with industry, conducting public and private hearings, and modelling of the East Coast gas system. The ACCC will also exercise compulsory information powers as required to access information not available to other inquiries."

Adapted from press release by Katie Woodward

Read the article online at: https://www.lngindustry.com/liquid-natural-gas/05062015/accc-calls-for-gas-inquiry-public-help-901/