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posted on:
April
29
2016

ACCC Report - Inquiry into East Coast Gas Industry

 

In April 2015 the Government Minister for Small Business commissioned the ACCC to hold a public inquiry into the competitiveness of wholesale gas prices and structure of upstream, processing transportation, storage and marketing segments of the east coast gas industry.


The ACCC have now published the findings from their inquiry and have identified the following issues:


1) There are three key factors feeding the uncertainty about future gas supply:


- Gas flows to the LNG projects, which are removing gas from the domestic market.


- The low oil price, which is resulting in declining investment in gas exploration and lower production forecasts for both domestic and LNG projects.


- Moratoria and regulatory restrictions which are affecting onshore gas exploration and development, in New South Wales, Victoria, Tasmania and potentially the Northern Territory.


2) Pipeline sector problems exacerbate gas supply and pricing issues in the domestic market


- The ACCC have found evidence of monopoly pricing giving rise to higher prices and economic inefficiencies.


- There is not the competition or regulation to constrain the behaviour of pipelines


3) Market operation and transparency should be improved


- The east coast gas market is not transparent or flexible and is not signalling expected supply problems effectively.


The ACCC have included a number of recommendations to deal with each of these issues and it will be interesting over coming months to see what changes are adopted.


For further information on the Inquiry click HERE