The ACCC has issued a draft decision proposing to grant conditional authorisation to members of the Gorgon gas project joint venture for the joint marketing of natural gas to customers in Western Australia until 31 December 2015.

The Gorgon project is a proposed liquefied natural gas (LNG) and domestic gas development off the north-west coast of Western Australia. The members of the Gorgon gas project joint venture, which include Chevron Australia, Mobil Australia and Shell, had sought authorisation from the ACCC to jointly market and sell gas from the project for supply in Western Australia.

Although a number of purchasers of gas in Western Australia opposed the authorisation, arguing that separate marketing is commercially and practically feasible in the Western Australian market and that joint marketing would result in less competition and higher prices, the ACCC stated that the current features of the Western Australian domestic gas market present significant difficulties for separate marketing of gas. The ACCC formed this view having regard to the ‘lumpy’ demand profile of the market, driven by relatively few large customers and long term contracts and a lack of liquidity with little trading and no well developed secondary markets, coupled with very limited gas storage options.

The proposed authorisation is conditional on the joint venture parties complying with ‘ring-fencing' arrangements to protect competitively-sensitive information controlled by the parties.

The ACCC now seeks further submissions on the draft determination before it makes a final decision.