LNG (LIQUIFIED NATURAL GAS)

Green light for Gorgon joint gas marketing

PARTNERS in the giant Gorgon gas project have been given conditional interim authorisation from t...

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The approval, which comes despite opposition from big gas customers, allows Gorgon partners Chevron, ExxonMobil and Shell to continue to engage potential customers and obtain information relevant to their final investment decision.

ACCC chairman Graeme Samuel said the authorisation was unlikely to result in irreversible changes to the market as any gas sales agreements entered into during this period would be conditional on the ACCC granting final authorisation.

"The Gorgon gas project is a major greenfields project which will provide a new source of natural gas to the Western Australia market and will involve a substantial level of upfront investment by the joint venture participants," he added.

The DomGas Alliance, which represents WA's largest gas customers, had earlier this month told the competition watchdog that it strenuously opposed the request by the Gorgon partners to jointly market gas from the project.

DomGas Alliance chairman Stuart Hohnen had said that promoting vigorous competition in the WA gas market was an issue of vital importance for businesses and households.

He said the lack of competition in the WA gas market had resulted in recent domestic gas prices being about four to five times higher than in the eastern states on a delivered basis.

The ACCC said that in order to address this issue, it had decided the interim authorisation would only take effect once the Gorgon partners had their ring fencing arrangements independently audited and any changes required to make them effective had been implemented.

The commission is also undertaking public consultation on the applications for authorisation prior to making a draft determination by September 2009.

Chevron and its partners are developing a three-train liquefied natural plant capable of producing 15 million tonnes of LNG per annum.

The project will include a domestic gas plant capable of supplying 300 terajoules of gas per day.

The company had earlier this month invited expressions of interest for up to 150TJ/d of domestic gas.

The Gorgon partners are Chevron Australia (operator and 50%), Shell (25%) and ExxonMobil (25%).

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