The ACCC is proposing to reauthorise Australia Pacific LNG Pty Ltd, Gladstone LNG, and the Queensland Curtis LNG Project to discuss and coordinate their maintenance schedules, maintenance providers, and maintenance techniques for another five years.
The proposed reauthorisation would mean that all three applicants can coordinate when and how maintenance of their gas plants occur, and when their facilities will be taken offline. The ACCC is now consulting on the draft determination.
“Coordinating the maintenance undertaken at these facilities will reduce the likelihood of major disruptions to domestic gas markets, which could occur if multiple maintenance events cause more than one facility to be taken offline at the same time,” ACCC Chair Rod Sims said.
The LNG producers’ facilities convert natural gas into LNG for export. Each LNG facility is connected to gas wells in the Surat and Bowen basins of Queensland. However, they also purchase gas in nearby wholesale markets.
When any of the applicants’ LNG facilities are offline, they may redirect their gas to wholesale markets for sale. The LNG facilities use very large quantities of gas and can have significant effects on the market price when their facilities are offline.
The ACCC first authorised maintenance schedule coordination in 2016, with a condition requiring that applicants publicly disclose information they share between themselves. The ACCC proposes to reauthorise the arrangements subject to the same condition to ensure the applicants do not have an information advantage.
“The condition allows all market participants to know when maintenance is going to occur and to make sure that they are not exposed to unnecessary risk,” Mr Sims said.
In seeking reauthorisation, the LNG producers suggested that the condition would not be required once an expected package of transparency measures is implemented under the National Gas Law. The transparency measures will likely be implemented during the five year period of reauthorisation and will require LNG producers to provide detailed information, including forecast maintenance events in the coming 12 months.
However, coordination by the LNG producers about maintenance plans more than 12 months into the future would not be reported under the National Gas Law, and that this could be detrimental for other market participants.
“At this stage we consider that all information shared amongst producers should be disclosed to the rest of the market, including information that relates to activity beyond 12 months,” Mr Sims said.
“We consider it is important that the existing reporting condition continue to apply, even though the LNG producers may be required to report some of this information following anticipated changes to the National Gas Law.”
The ACCC invites submissions on the draft determination and proposed condition by 25 May 2021. The ACCC will then make its final decision.
Further information on how to make a submission is available at Australia Pacific LNG Pty Limited & Ors.
Notes to editors
ACCC authorisation provides statutory protection from court action for conduct that might otherwise raise concerns under the competition provisions of the Competition and Consumer Act 2010.
Broadly, the ACCC may grant an authorisation when it is satisfied that the likely public benefit from the conduct outweighs any likely public detriment.
As the Applicants’ existing authorisation expires on 6 May 2021, the ACCC has also decided to grant interim authorisation, subject to the same condition as in 2016, to enable the arrangements to continue while the ACCC is considering the substantive application.
More information on the National Gas Law and National Gas Rules can be sought from The Australian Energy Market Commission (AEMC).
In 2016, wholesale gas traders raised concerns that coordination between LNG producers would allow producers to trade advantageously in gas markets, because each would know when maintenance is going to occur.
To address this, the ACCC imposed a condition of authorisation requiring the LNG producers to publicly disclose maintenance schedule information that they share with each other. The condition was formulated following consultation with the LNG producers and market participants including gas retailers.
New gas transparency measures which would require the applicants to report scheduled maintenance events, as currently takes place under the condition, are expected to be introduced under the National Gas Law by the end of 2022.