Under an agreement with the Western Australian Government, the project partners are required to reserve 2,000 petajoules from the Gorgon fields for delivery to customers in Western Australia.
Acting ACCCC Chairman Peter Kell said “The ACCC recognises that a number of large gas customers have opposed these applications for authorisation. However, the ACCC is of the view that, due to the current characteristics of the Western Australian natural gas market, this important source of new gas supply in Western Australia is likely to commence earlier and in larger volumes under joint marketing than would otherwise be the case.”?
The ACCC has said that separate marketing by the Gorgon partners in the Western Australian natural gas market is currently not commercially viable for a number of reasons including limited storage facilities and the bulk of natural gas demand currently being satisfied by a small number of customers, as well as market participants’ preference for long-term contracts.
DomGas Alliance Chairman Tony Petersen said the ACCC’s decision was taken in the face of overwhelming opposition by industry, power generators, infrastructure operators and gas consumers.
“It is illogical for the ACCC to conclude that three of the world’s biggest oil and gas companies need the protection of joint selling arrangements to sell their 5 per cent of Gorgon gas to Australian consumers,”? Mr Petersen said.
However, the ACCC predicted significant risks on account of deferring production, lower volumes of gas production or increasing price to reflect the higher risk were the Gorgon partners to attempt to market separately.
The Gorgon LNG Development is a joint venture between Chevron as operator, ExxonMobil and Shell, and involves the installation of a subsea gathering system and pipelines from the Gorgon and Io/Jansz fields to Barrow Island. Three 5 million tonnes per annum (MMt/a) LNG trains, to be located on the central-east coast of Barrow Island, will process the gas. LNG will then be shipped to international markets while domestic gas will be delivered via a 90 km subsea pipeline to the Western Australian mainland, interconnecting with the Dampier to Bunbury Natural Gas Pipeline.