Commerce Act: Commission releases draft determination on Pohokura Gas Authorisation
Published16 May 2003
Issued 15 May 2003
Commerce Act: Commission releases draft determination on Pohokura Gas Authorisation
The Commerce Commission would authorise the joint marketing and selling of gas produced from the Pohokura field subject to certain conditions. The Commission's preliminary view is that while there are benefits associated with the joint venture marketing arrangements, the Commission cannot be certain that, in the absence of conditions on the authorisation, the benefits will be achieved.
Commission Chair John Belgrave said subject to the Commission's proposed conditions and dependent on technical performance, the field could be developed, with gas being available from February 2006.
The Commission today released its draft determination relating to an application by Preussag Energie, Shell Exploration and Todd Petroleum Mining (the Applicants), for authorisation under section 58 of the Commerce Act to enter into arrangements to jointly market and sell gas produced from the Pohokura field off the Taranaki coast. Preussag advised the Commission this week that it has sold its participating interested in the Pohokura joint venture to OMV New Zealand Limited.
Mr Belgrave said that although the Commission's preliminary view was to grant the authorisation, the draft determination identified four conditions that an authorisation would be subject to.
Those conditions are:
. limiting the time period of the authorisation to five years;
. requiring first gas from the Pohokura field to be available by February 2006 and for the field to be under full production capability by 30 June 2006;
. restricting the authorisation to not apply to any successors of the Applicants; and
. ring-fenced marketing of the Pohokura field.
"The Commission's preliminary view, subject to the proposed conditions, is that benefits would result from the timely development of the Pohokura field and that these benefits would exceed the potential detriment to future competition in the effected markets," said Mr Belgrave.
The arrangement comprises two provisions under which the Applicants propose to:
. discuss and agree on all relevant terms and conditions, including price, quantity, rate, specification and liability for the joint sale of gas form the Pohokura field; and
. negotiate and enter into contracts for the sale of Pohokura field jointly (ie as one seller).
The Commerce Act prohibits competitors agreeing to work together in a way that reduces competition between them. However, the Act does allow for authorisation of potentially anti-competitive business practices if the public benefit is greater than the detriment to competition.
Mr Belgrave said the Commission invited submissions on its draft determination. The deadline for submissions was Monday 9 June 2003. The Commission will hold a conference on 1-3 July 2003 (inclusive), with the final determination due on 7 August 2003.
A copy of the draft determination is available on the Commission's website, www.comcom.govt.nz/adjudications/publicregisters
