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Construction of a PNG to Queensland pipeline

ACCC proposes to authorise joint marketing of PNG gas

The Australian Competition and Consumer Commission today issued a draft determination proposing to authorise* the joint marketing in Australia of gas from the proposed PNG Gas Project.

The project is a joint venture enterprise involving the production and sale of PNG gas to customers in Australia. The project is expected to commence gas sales into Australia in 2009 following construction of a PNG to Queensland pipeline.

Joint marketing means that the joint venture partners (ExxonMobil Group, Oil Search Group, the Mineral Resources Development Company Limited Group, and the Merlin Petroleum Company) can agree on common terms and conditions including the price at which they will offer the gas for sale to potential customers.

Such conduct could potentially breach the Trade Practices Act 1974 unless the parties involved can demonstrate that there are sufficient public benefits to outweigh any anti-competitive detriment.

An ACCC Commissioner, Mr Ed Willett, said public submissions supported the need for joint marketing arrangements in order that the project might commence production, however concerns were raised about the applicants' proposal for the authorisation to apply for the life of the project (about 30 years) and to be extended to all future participants".

"While the ACCC considers that the project will generate substantial public benefits, it cannot be certain that the benefits will outweigh any potential anti-competitive detriment for a period as long as the life of the project", Mr Willett said. "For reasons outlined in the draft determination, the ACCC proposes to grant authorisation for a period of 16 years".

Mr Willett said the applicants also demonstrated a willingness to address concerns about the possibility of commercially sensitive information being used in an anti-competitive manner and have agreed to establish ring-fencing measures to restrict the transfer of commercially sensitive information from the joint venture arrangement.

The ACCC invites interested parties to provide written submissions, or to request a conference in accordance with section 90A of the Act, in response to the draft determination.

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