ACCC moves to prevent costly delays on Curtis Island

An aerial shot of the APLNG Project.

An aerial shot of the APLNG Project.

The Australian Competition and Consumer Commission (ACCC) will impose a condition of authorisation on Curtis LNG plants – requiring Australia Pacific LNG, Gladstone LNG, and the Queensland Curtis LNG projects to publicly disclose maintenance schedule information that they share with each other.

The ACCC has also granted conditional interim authorisation that requires the LNG producers to discuss their plans for maintenance at each facility in the second half of 2016.

The ACCC’s move comes on the back of wholesale gas traders being concerned that coordination of maintenance of Curtis Island LNG plants will give rise to large changes to the wholesale price of gas.

“These LNG producers can create significant volatility in domestic gas markets when they go offline for maintenance. The condition allows all market participants to know when maintenance is going to be occurring and to make sure they aren’t exposed to unnecessary risk,” ACCC Chairman Rod Sims said.

“Coordinating maintenance schedules at these facilities will reduce the potential for costly delays and allow the LNG producers more efficiently to manage the large quantities of natural gas that flow to their facilities,” he added.

As part of its current east coast gas markets review, the Australian Energy Market Commission (AEMC) has released a draft recommendation that the LNG producers be required to publish two-year forecasts of their facilities’ capacity and gas demand, including any scheduled downtimes. Some market participants requested the ACCC impose these requirements on the LNG producers as part of the condition of authorisation.

In this case, the ACCC is proposing to confine the scope of the condition to remedying information asymmetry issues that arise directly from the proposed conduct (i.e. information about scheduled maintenance).

“Information is a crucial component for creating efficient, well-functioning markets. The AEMC is closely scrutinising the appropriate level of information these LNG producers should be required to provide to the market, and the ACCC considers that the AEMC’s review is the appropriate forum to assess these broader information transparency issues,” Mr Sims said.

The ACCC is seeking submissions on its draft determination, including the proposed condition of authorisation, before making a final decision.

Interim authorisation commences immediately and will remain in place until the date that the ACCC’s final determination comes into effect or it is revoked.

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