ACCC proposes to allow a joint marketing arrangement for the sale of LPG from the Otway Gas Project

The Australian Competition and Consumer Commission has issued a draft determination proposing to grant authorisation* to a joint marketing arrangement for the sale of liquefied petroleum gas from the Otway Gas project off Victoria.

"The ACCC proposes to allow Woodside Energy Ltd, Benaris International Pty Ltd and CalEnergy Gas (Australia) Ltd to negotiate and establish common terms and conditions for the sale of the LPG and to jointly market and sell it to a common customer or customers", ACCC Chairman, Mr Graeme Samuel, said today.

"The Otway Project is a joint venture between each of the applicants and Origin Energy Ltd.  Benaris and CalEnergy hold minority interests in the joint venture, and will consequently control relatively small volumes of the LPG produced".

The ACCC previously granted interim authorisation** to the applicants to begin contract negotiations to market and sell the LPG produced and delivered by the Otway Project from May/June 2006 through to December 2006.

"The applicants advise that in the absence of authorisation, it is quite possible that Benaris and CalEnergy would sell their LPG entitlements to Woodside or Origin. Given this, and the higher cost of marketing small volumes of LPG, the ACCC considers that, in the absence of authorisation, Benaris and CalEnergy are likely to sell their entitlements to Woodside or Origin.

"Also, given the separate marketing of the remaining significant participant in the Otway Project, Origin, and the small volumes of LPG produced by Benaris and CalEnergy, the ACCC considers that little, if any, anti-competitive detriment is likely to result from the applicants' joint marketing arrangement proposal.

"In any event, the separate marketing of Origin's LPG and the competitive constraint provided by LPG producers from other gas fields and refineries would limit any anti-competitive detriment generated by the proposed arrangement.

"The ACCC is satisfied that any detriment will be outweighed by benefit in the form of cost savings to Benaris and CalEnergy".
The ACCC proposes to grant authorisation for three years.  The ACCC will now seek further submissions and provide interested parties with an opportunity to seek a conference prior to it making a final decision.

More information regarding the application and a copy of the draft determination are available by following the Authorising anti-competitive conduct and Authorisations links on the ACCC's website.

Background

* The ACCC has the function, through the authorisation process, of adjudicating on certain anti-competitive practices that would otherwise breach the Trade Practices Act 1974. Authorisation provides immunity from court action, and is granted where the ACCC is satisfied that the practice delivers a net public benefit.

** Interim authorisation allows the parties to engage in the conduct prior to the ACCC considering the substantive merits of the application. The ACCC's decision in relation to interim authorisation should not be taken to be indicative of whether or not final authorisation will be granted by the ACCC.