Nahan calls for end to gas cartel
The historic deal that allows WA's biggest domestic gas providers to act as a cartel should be smashed up to force them to sell their supplies individually, the State's Energy Minister says.
Mike Nahan said he would like to see an end to the so-called joint marketing arrangements for the North West Shelf when they are reviewed by the Australian Competition and Consumer Commission next year.
The arrangements allow the NWS' six partners - who through the project control about half of WA's domestic gas supplies - to jointly discuss and negotiate common terms and conditions, including price. But the legal authority to act as a cartel - which was rolled over for five years by the ACCC in 2010 - has long outraged the State's major gas users who claim it gives the NWS unfair market power.
Although stressing they were his personal views, Dr Nahan said he wanted to see the partners market their gas on their own to encourage more competition and allow choice for buyers.
And he suggested a similar approach might be appropriate for Gorgon, whose partners Chevron, Royal Dutch Shell and ExxonMobil, were also granted joint marketing authorisation to help encourage the development.
"I personally found it difficult to understand the ACCC's explanation for why they allowed collective selling," Dr Nahan said.
"There is a different ACCC head now. They might have a different view. I believe we should have individual selling."
Industry insiders suggest ending the joint marketing deal will not have a major effect on the domestic gas market in the short term because most of its resources are locked up in contracts. But it could give buyers extra leverage when seeking new supplies.
The renewed focus on NWS' domestic support comes amid uncertainty about how long its Karratha gas plant will supply WA.
The Woodside Petroleum-operated NWS has satisfied State Agreements on domestic gas supply, and the partners' efforts are now focused on keeping the five LNG trains at Karratha full beyond the end of this decade, when the North West Shelf gas fields start to run dry.
On Tuesday, the NWS signed a non-binding deal to toll-treat gas from Hess Corp's Equus field, which is estimated to contain up to three trillion cubic feet of gas. However, none of Hess' gas is destined for the WA market.
The DomGas Alliance welcomed Dr Nahan's view because joint marketing hurts "gas on gas" competition.
A NWS spokeswoman said it reviewed its marketing arrangements "periodically".
