Australia's competition watchdog will allow natural gas from the massive Chevron-led Gorgon liquefied natural gas (LNG) development offshore Western Australia to be marketed jointly by the project partners.
The Australian Competition and Consumer Commission (ACCC) said in a statement Thursday that several large gas customers had opposed the joint venture's applications for authorization to jointly market the gas.
"However, the ACCC is of the view that ... this important source of new gas supply in WA is likely to commence earlier and in larger volumes under joint marketing than would otherwise be the case," acting ACCC chairman Peter Kell said.
It said that the separate marketing of Gorgon gas was currently not commercially viable.
This was in light of a small number of customers comprising the bulk of demand, the preference of market participants to sign long-term contracts, little short-term trading of gas, and limited storage facilities.
"Were the Gorgon partners to attempt to separately market, the ACCC considers they would face significant risks that may result in them deferring production, producing lower volumes of gas or increasing prices to reflect higher risk," the ACCC said.
It said it would impose conditions designed to prevent commercially sensitive information being transferred to competing gas-producing projects.
Authorization is granted until the end of December 2015, which is a shorter period than that sought by the Gorgon partners.
"The ACCC considers that in the next six years, the WA gas market may develop the necessary characteristics to support separate marketing," the ACCC said.
Kell said the Gorgon project would provide a welcome new source of gas supply to help meet growing demand and diversify WA's energy supply sources.
(C) 2009 Asia Pulse Pte Ltd.