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Commission may revoke Pohokura gas authorisation

30 September 2004-05 / 038

Commerce Commission may revoke Pohokura
gas authorisation

The Commerce Commission is considering revoking its decision to authorise four companies to enter into arrangements to jointly market and sell gas produced from the Pohokura natural gas field on the basis that a material change in circumstances may have occurred since the authorisation was granted.

The Commission granted authorisation to OMV New Zealand Limited, Shell Exploration New Zealand Limited and Shell (Petroleum Mining) Company Limited and Todd (Petroleum Mining Company) Limited in September 2003. Subject to conditions, the Commission’s authorisation provided for the parties to discuss and agree on all relevant terms and conditions, including price, quantity, rate, specification and liability for the joint sale of gas from the Pohokura natural gas field. The authorisation also provided for the parties to negotiate and enter into contracts for the sale of gas from the field jointly, for example as one seller.

Commission Chair Paula Rebstock said Shell and OMV informed the Commission in April this year that the parties had decided to market gas from the Pohokura field separately.

“On the face of it, this represents a material change in the circumstances around which the Commission determined to authorise the proposed anti-competitive arrangement, and on this basis, the Commission is considering a possible revocation of its decision,” said Ms Rebstock.

“As part of the process, the Commission is inviting interested parties to make submissions on whether revocation is appropriate” said Ms Rebstock.

While the Commission generally prefers separate marketing because competition is enhanced by more competitors in the market, Ms Rebstock said the joint marketing arrangement had been authorised primarily because it was considered that it would bring about earlier production from the field. As that appears to be no longer the case, the Commission considers that there may be a case for revocation of the authorisation.

ENDS

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