ACCC considers re-authorising Curtis Island LNG clause

The Australian Competition and Consumer Commission will consider re-authorisation for five years.

The Australia Pacific LNG facility on Curtis Island.

Re-authorising Curtis Island LNG operations is being examined to permit three companies to continue production, storage and exports for another five years.

The Australian Competition and Consumer Commission ACCC is examining a proposal to discuss and co-ordinate the maintenance schedules, maintenance providers, and maintenance techniques of Australia Pacific LNG Pty Ltd, Gladstone LNG, and the Queensland Curtis LNG projects.

The re-authorisation would prevent producers trading advantageously in gas markets, because each would know when maintenance is going to occur, as operators must adhere to ACCC conditions.

Curtis Island plant operators, who convert natural gas into LNG are connected to gas wells in the Surat and Bowen basins, also purchase gas from wholesale markets.

The three companies, which can redirect their gas to the wholesale market when offline, use such large quantities they can have significant effects on the market price when their facilities are offline.

The maintenance schedule disclosure, which the ACCC put in place in 2016, is proposed to be re-authorised to ensure the companies do not have an information advantage.

“Co-ordinating 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.

ACCC Chair Rod Sims. Picture: Zak Simmonds

“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.”

The ACCC said in its application the companies suggested the maintenance schedule disclosure condition wouldn’t be required once a new National Gas Law was implemented.

The transparency measures will likely be implemented during the five year period of re-authorisation and will require LNG producers to provide detailed information, including forecast maintenance events in the coming 12 months.

However, co-ordination 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.”

Submissions on the draft determination and proposed condition can be lodged by May 25, 2021.

The ACCC will then make its final decision.

Information on how to make a submission is available here.

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