ACCC has gas pipeline monopoly in its sights

PICTURE BY JAMES DAVIES. DUKE ENERGY AUSTRALIA LAUNCH OF THE GAS TRADING HUB. LONGFORD VICTORIA. VICHUB CONNECTS THE EASTERN PIPELINE AND THE TASMANIAN GAS PIPELINE TO THE GASNET SYSTEM. GAS NATURAL GAS PIPE LINE ENERGY TRADING HUB INTERCONNECTION MARKET VICHUB SPECIALX 001The n Consumer and Competition Commission is looking to drive down energy prices by targeting the gas pipelines market, following the release of its domestic gas shortage inquiry.
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The ACCC Gas Inquiry 2017-2020 report found that while action has been taken by energy companies to remedy a predicted domestic gas shortfall across the east coast, prices still remain high.

It also supported the potential of AGL’s LNG regasification plant in Victoria to reduce the state’s gas shortages.

ACCC chairman Rod Sims said that while energy companies have acted to address a forecast domestic gas shortfall of up to 108 petajoules on the east coast, and create a 20 petajoule surplus on the horizon, the market remains challenging.

“It’s still a tight market, price offers for industrial users have come down from $16 per gigajoule to between $8 to $12 per gigajoules, but it should be closer to $6 to $8 per gigajoule,” Mr Sims told Fairfax Media.

“It’s still too high, but it is an improvement.”

Mr Sims said the next major focus for the ACCC is reducing the impact of ‘s pipeline monopoly.

“We want to regulate the pipeline monopoly,” Mr Sims told Fairfax Media.

“We can’t break up it as the situation is what it is, but there are actions we can take.”

The majority of ‘s gas pipelines are owned by three companies, APA Group, Jemena, and n Gas Networks.

Mr Sims said the ACCC will first ensure pipeline owners cannot stop others from accessing gas pipelines.

Secondly, in terms of pricing, Mr Sims said there will now be an arbitration system put in place where issues over access exist.

“This means when contracts expire companies can seek arbitration.”

He said these actions will have a direct impact on gas prices and better results for gas users.

“In two to three years pipeline prices will come down, and we’ll see lower flow-on prices in Victoria and NSW,” Mr Sims said.

The ACCC also backed the potential for AGL’s proposed, $250 million Crib Point floating LNG terminal, in Victoria.

“If viable, an LNG regasification terminal could be an alternative form of transport for bringing additional gas into the southern states,” the report said.

Mr Sims said there were a number of ways Victoria could address its forecast gas shortfall.

“The better way for Victoria is through access to gas in the state, but if it continues to be dependent on Queensland for gas, then a regasification facility makes sense,” he said.

AGL aims to begin construction of the facility in 2019, and sourcing LNG from the global market in 2020/21.

Speaking at the n Financial Review’s National Energy Summit earlier this year, Morgan Stanley analyst Rob Koh said AGL’s planned import facility makes economic sense.

“I think it’s not a bad idea for AGL to be talking about it and to be planning for that,” Mr Koh said.

“Part of that dynamic for AGL is having a reliable supply of gas to the southern markets. As we know, the marginal producer at the moment is in Queensland and the cost of shipping gas from the northern markets to the southern markets is in the order of $2.70.

“So finding another route that is another alternative to that is potentially a good idea.”




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