Australian regulator authorises WA and NT LNG producers to coordinate maintenance

Australia’s competition regulator on Friday said it would allow Chevron, Inpex, Shell and Woodside to coordinate maintenance activities at their liquefied natural gas (LNG) facilities in Western Australia and the Northern Territory.

Australian Competition and Consumer Commission (ACCC) said in a statement it made the decision as the four LNG producers were competing for a limited pool of skilled contractors and specialised equipment to conduct scheduled maintenance.

“LNG producers can now schedule maintenance together without risking breaching competition laws, reducing concurrent work at their facilities. This will improve efficiency and maximise LNG production,” ACCC Chairman Rod Sims said.

Besides liquefying and exporting gas, some of the facilities also supply, or have the ability to supply, natural gas to wholesale domestic markets. When the LNG facilities are offline for maintenance, some gas may be directed to these wholesale markets.

“If producers become aware of each other’s LNG facility shutdowns as part of this agreement, this information might give them an advantage in gas trading markets,” Sims said.

To address this, the ACCC has imposed a condition of authorisation requiring the LNG producers to publicly disclose maintenance schedule information that they share with each other. A similar condition applies under an authorisation granted to LNG producers in Queensland in 2016.

“Information is a crucial component for creating efficient, well-functioning markets. Market-sensitive information disclosed to competitors as part of this process should be available to all participants,” Sims said.

Authorisation is granted for five years, rather than the 10-year period sought by the LNG producers, ACCC said.

“With the evolving nature of the gas markets, there is significant uncertainty about the impact of the proposed conduct on related markets. If the parties wish to seek reauthorisation in 2023, the ACCC will test whether the expected benefits and detriments have arisen and to assess the effectiveness of the condition,” Sims said.

The Gorgon, Wheatstone, North West Shelf and Pluto LNG facilities in Western Australia are currently operational. The Prelude LNG facility off the Western Australian coast and the Ichthys LNG processing facility are expected to enter service in 2018.