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2nd draft Pohokura gas determination to be issued

Issued 14 October 2005/ no 040

Commission to issue second draft determination on Pohokura gas

The Commerce Commission is to issue a second draft determination in relation to its consideration of whether to revoke or vary the Pohokura gas authorisation.

The Commission previously authorised an arrangement allowing Shell, OMV and Todd to jointly market the gas from the Pohokura gas field in Taranaki. The arrangement required authorisation because it had the potential to lessen competition in the market. The authorisation was granted on the basis that joint marketing would allow the gas to be made available earlier than would be possible if the companies marketed it separately.

Since that time, the parties have advised the Commission that they have unable to agree on a joint approach, and so would separately market and sell the gas.

The Commission will therefore consider revoking its previous authorisation. According to section 65 of the Commerce Act, an authorisation can be revoked if it was granted on the basis of information that was false or misleading, or there have been material changes in the circumstances since it was granted.

The Commission released an initial draft determination in February 2005 in which its preliminary view was that it should revoke its original authorisation allowing Shell, OMV and Todd to jointly market and sell Pohokura Gas. After considering submissions on that first draft determination, the Commission has agreed to consider granting a substitute authorisation regarding specific categories of gas.

Those categories are:

- Gas produced during the process of commissioning the Pohokura field and its production station;

- Gas called “peaking gas” which is produced for limited time periods above the rated output of the field and production station; and

- Gas produced at the end of the life of the field.

The Commission’s preliminary view, in this draft determination, the Commission is based on submissions from the Pohokura parties that in respect of these categories of gas production output was uncertain and there could be practical difficulties for the parties to market and sell that gas individually.

Interested parties can make submissions on the revised draft determination. Submissions close on 14 November. At this stage, the Commission does not consider a conference is necessary to discuss the revised draft determination.

ENDS


Commission media releases can be viewed on its web site www.comcom.govt.nz

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