ACCC draft decision to approve Queensland oil joint marketing arrangements

The Australian Competition and Consumer Commission has issued a draft decision proposing to authorise Santos QNT Pty Ltd and ten other oil producers to jointly market their oil produced in the Surat Basin and Denison Trough in Queensland.  Oil includes crude oil and condensate.

Without approval of these joint marketing arrangements, the ACCC considers it likely that a number of the producers would cease oil production.  As such, the arrangements will help to maintain current levels of domestic production.

The producers transport oil from the Surat Basin and Denison Trough to the Lytton storage facilities in Brisbane.  Oil production from these regions represents a very small proportion of total oil production in Australia (around 0.3 per cent), with some of the producers producing as little as a few barrels of oil per day.

Given the small volume of oil covered by the arrangements, as well as the significant influence of global oil prices on domestic oil supply contracts, the ACCC considers there is minimal, if any, anti-competitive detriment likely to be generated by the joint marketing arrangements.

The ACCC previously granted conditional interim authorisation to the arrangements on 24 March 2010.  Interim authorisation remains in place until the date the ACCC’s final determination comes into effect, or unless revoked.

Authorisation provides immunity from court action for conduct that might otherwise raise concerns under the competition provisions of the Trade Practices Act 1974.  Broadly, the ACCC may grant an authorisation when it is satisfied that the public benefit from the conduct outweighs any public detriment. Interim authorisation allows the parties to engage in the conduct prior to the ACCC considering the substantive merits of the application.

The ACCC's draft decision will be available from the public register on the ACCC website, www.accc.gov.au/AuthorisationsRegister.  The ACCC invites submissions in response to the draft decision from interested parties.