“The proposed acquisition is unlikely to substantially lessen competition under Section 50 of the Trade Practices Act 1974,” Samuel said.
AGL and QGC announced on December 5 that they had agreed to several proposed arrangements, which provided for AGL to take an initial 27.5% stake in QGC. This stake could be permitted to rise to 30%.
AGL will be able to appoint three directors to a newly expanded QGC board of nine directors.
“The ACCC took into consideration AGL’s relatively limited involvement in gas production in southern Queensland,” Samuel said.
“The ACCC also analysed the vertical integration that would occur due to AGL’s recent acquisition of SunGas, which has large interests in Queensland gas retailing. The ACCC decided that the existence of Origin and Santos as key competitors in gas production would be likely to lessen any possible competition effects.”
Additional arrangements also provide for AGL and QGC to enter into a gas sale agreement for AGL to purchase 540 petajoules of gas over 20 years, with an additional option of 200PJ.
AGL will also enter into a gas market development services agreement with QGC, whereby QGC will obtain rights to use AGL’s excess pipeline capacity.
QGC managing director Richard Cottee said the ACCC's decision recognised that his company had become a significant producer of CSM gas and has potential to expand beyond the Berwyndale South gasfield.
“QGC’s successful exploration program and gas field development has established the company as a competitive force in the market,” Cottee said.
“While QGC’s 2P reserves of 695 PJ at Berwyndale South represent immediate value realisable through sales contracts, the company’s 3P reserves of 2556 PJ represent even greater potential and ensure QGC will continue as a strong competitor into the future."
Santos’ bid for QGC was expected to close at the end of the month but the company, Australia’s third-largest petroleum producer, has extended it until February 7.
The ACCC is scheduled to release its findings into potential competition issues of Santos’ proposed takeover on January 31.
