Mereenie authorisation determination

The Australian Competition and Consumer Commission has issued its Determination on the Mereenie Producers' application for authorisation of the Gasgo Agreement.

The ACCC has granted authorisation to the Mereenie Producers to give effect to the Gasgo Agreement, a long term gas supply in the Northern Territory between the Mereenie Producers and Gasgo Pty Limited. The gas is ultimately sold to the NT Power and Water Authority for the generation of electricity. The authorisation also allows the producers to discuss and agree on common terms and conditions, including price, for the supply of gas under the agreement.

Authorisation is a public process where the ACCC may grant immunity from court action for arrangements that may breach the competition provisions of the Trade Practices Act 1974.

Authorisation is granted only if the ACCC is satisfied the arrangements confer a net benefit to the public.

The ACCC concluded in its Determination that the public benefit, that is, a continuation of a secure source of gas supply for the generation of electricity in the Northern Territory, outweighed any anti-competitive detriment. The Gasgo Agreement is the third in a series of contracts between the Mereenie Producers and Gasgo.

Mr Allan Asher, Deputy Chairman of the ACCC, said that the main issue that arose during the public consultation process concerned not so much the provisions of the Gasgo Agreement itself, but rather certain provisions of the original agreement, which is still current.

Those provisions give Gasgo a pre-emptive right over gas supplied from the Mereenie field. The Mereenie Producers are required to offer to Gasgo in the first instance any quantity of gas that they may be negotiating with a third party on the same terms and conditions, including price, that would be offered to the third party.

"In the ACCC's view the pre-emptive right is anti-competitive, represents a barrier to entry to the gas market and electricity generation in the Northern Territory, and may well be in breach of the Trade Practices Act," he said.

The ACCC had raised its concerns directly with Gasgo and is actively considering legal action against Gasgo.

Copies of the Draft Determination will be available on the ACCC's Internet site http://www.accc.gov.au or by contacting Mr John Bastick on (02) 9230 9151.