The ACCC has issued a draft determination to allow joint marketing arrangements for natural gas produced from the Northern Territory’s Mereenie gas field. The Mereenie oil and gas field is located in the Amadeus Basin, approximately 250 km west of Alice Springs.
Central Petroleum, Macquarie Mereenie, New Zealand Oil and Gas and Cue Energy are currently the joint venture partners in the field.
ACCC authorisation would permit current and future joint venture participants to jointly market gas from the Mereenie field for five years and, within this period, to enter into gas supply agreements with customers on common terms and conditions that could operate up to December 2031.
“Joint marketing is likely to lead to reduced transaction costs and encourage investment to increase gas production at Mereenie, which will facilitate bringing gas to market sooner,” ACCC Chair Rod Sims said.
“While separate marketing is generally better from a competition perspective, in this instance the small volume of gas involved and the nature of the NT-Mount Isa gas market, where most demand is met by a limited number of large contracts, means separate marketing does not bring significant competition benefits,” Mr Sims said.
“Customers in the NT-Mount Isa region have the option of alternative sources of supply such as the Power and Water Corporation, from the NT’s Blacktip Field, and suppliers from the Cooper Basin and potentially the Galilee Basin.”
“These alternatives limit the risk of the Mereenie joint venture offering its gas at significantly higher prices, or on less flexible terms,” Mr Sims said.
The ACCC granted interim authorisation for the joint venture participants to jointly market natural gas from the Mereenie field and enter into conditional gas supply agreements on 7 October 2021. Interim authorisation does not allow any gas that has been jointly marketed to be supplied unless authorisation is granted in the ACCC’s final determination.
The ACCC is seeking submissions from interested parties in response to the draft determination by 13 December 2021. The draft determination and more information on how to make a submission are available on the ACCC public register at Macquarie Mereenie & Ors.
Background
Central Petroleum Limited (ASX: CTP), Macquarie Mereenie Pty Ltd, Central Petroleum Mereenie Pty Ltd (as trustee for the Central Petroleum Unit Trust), New Zealand Oil and Gas Limited (ASX: NZO) and Cue Energy Resources Limited (ASX: CUE) are joint venture partners at the Mereenie oil and gas field, which is located in the Amadeus Basin, approximately 250 km west of Alice Springs.
Since the ACCC’s previous 2018 authorisation for joint marketing of gas, there has been an expansion of the Mereenie field, and growth in the sale of their gas that has extended to customers in Mt Isa and beyond.
Joint marketing will apply only to the sale of gas produced at the Mereenie field, not to gas produced from other fields owned or operated by participants in the Mereenie joint venture.
The gas to be jointed marketed from the Mereenie field accounts for approximately 20 per cent of the gas supplied to the Northern Territory and Mt Isa regions and less than 1 per cent of gas supplied to the east coast gas market.
Note
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
