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Commission revokes Pohokura gas authorisation

Media Release


Issued 2 June 2006/134

Commission revokes Pohokura gas authorisation

The Commerce Commission has revoked the 2003 authorisation it granted to Shell, Todd and OMV to jointly sell gas from the Pohokura field.

Commerce Commission Chair Paula Rebstock said that there had been a material change in circumstances since the Commission granted authorisation to the three owners of the Pohokura field in September 2003.

At that time it was considered that an authorisation permitting the joint sale of Pohokura gas would avoid a one year delay in using the gas, because the owners would not need to negotiate the complex contractual arrangements necessary to sell the gas separately. The Commission authorised the arrangement on the basis that avoiding a one year delay was a substantial benefit to the public, which outweighed the anti-competitive nature of joint selling.

However, the Pohokura owners were ultimately unable to agree on arrangements to jointly sell the gas. Each owner separately sold their share, without the expected delays in production.

“Separate selling has not resulted in delays,” Ms Rebstock said, “so there is now no public benefit in allowing the parties to enter into an anti-competitive arrangement to jointly sell the gas.”

“For that reason the Commission has decided to revoke the authorisation.”

A public version of the Commission’s decision will be available as soon as practicable on the Commission’s website www.comcom.govt.nz under Public Registers.

Background

The Pohokura field is owned and operated as a joint venture by Shell (48%), OMV (26%) and Todd (26%). Production from the field is due to commence during 2006. When in full production, the Pohokura field is expected to supply up to half New Zealand’s gas consumption.

Under the Commerce Act, the Commission may authorise an anti-competitive arrangement if the benefits to the public of New Zealand outweigh the detriments arising from the lessening of competition.

The Pohokura authorisation was reviewed by the Commission under section 65 of the Commerce Act. Section 65 allows the Commission to revoke an authorisation if it was granted on the basis of information that was false or misleading, or if there has been a material change in circumstances since the authorisation.

ENDS

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