Barriers to competition in Australian gas markets must be removed, Acting Australian Competition and consumer Commission Chairman, Mr Allan Asher, told an Australian Gas Association Gas Industry Forum in Melbourne, today.

The removal of these barriers should be a central policy objective for the Commonwealth, States and Territories in reforming gas markets, he said.

Much remained to be done in order to achieve the stated Council of Australian Governments (COAG) objective of free and fair trade in gas by July 1996.

"The removal of these barriers, supported by downstream reforms such as access, should promote the efficient growth of Australian gas markets by encouraging new producers and suppliers to market. Only if these barriers are removed will industrial and domestic consumers of gas obtain the benefits of a fully competitive gas market. From the point of view of gas purchasers, these benefits will include choice of suppliers, and competitive pricing.

"The development of a more competitive gas market may also create commercial pressures for separate marketing by gas joint venture gas producers thereby creating further opportunities for growth and price competition.

"The major barrier to competition is the South Australian Cooper Basin (Ratification) Act 1975 which exempts anti-competitive clauses tying AGL to the Cooper Basin Producers from the Trade Practices Act.

"It is the ACCC's view that the removal by the South Australian Parliament of the protections in the Cooper Basin (Ratification) Act for the anti-competitive elements of the AGL Cooper Basin supply arrangements should be one of the major objectives of gas market reform. These anti-competitive elements restrict the ability of producers other than the Cooper Basin Producers from selling gas to AGL in New South Wales and, as such, deter entry to the New South Wales gas market.

The other barriers to competition raised, actual and potential, include:

  • discriminatory haulage rates favouring AGL on the Moomba to Sydney pipeline;
  • legislated shareholding limitations for Santos and AGL;
  • the prospect of inconsistent regimes for access to transmission pipelines and distribution networks;
  • the possibility that third parties may be required to fund AGL's take or pay obligations in the NSW gas market, unless these obligations are dealt with commercially;
  • uncertainty as to whether access regimes will apply to gas processing facilities and gathering lines.

Mr Asher also emphasised that governments need to consider the degree of market power of existing gas producers when conferring exploration permits during permit allocation and relinquishment processes.

Copies of the speech are available from ACCC offices in all State capitals, the Northern Territory, Townsville and Tamworth.