She told the Energy Summit conference in Wellington yesterday that the commission had learned from the 2003 Pohokura partners’ application to jointly market and sell gas from their near-shore Taranaki field.
The partners – Shell New Zealand, Todd Energy and Austrian firm OMV – were adamant that separate marketing would be extremely difficult and could cause delays in field development of up to seven years. Therefore, the commission authorised joint marketing because it was persuaded that was necessary to achieve early production.
However, the partners subsequently proceeded to separately sell rights to perhaps half the field’s reserves without causing any obvious delays in field development.
The predominant benefit claimed for joint marketing was lost and the commission last month revoked its authorisation, though the partners had pleaded for joint arrangements during field commissioning, ‘peaking gas’, and gas produced at the end of field life.
“Any future variation from separate marketing of Pohokura gas will put the parties at risk of breaching the Commerce Act,” she warned them.
“The commission will have no compunction about revoking authorisations it issues if it is demonstrated they were based on false or misleading information, or if there has been a material change in circumstance.”
She said the commission did not object in principal to joint development of gas fields or joint marketing of gas.
However, it was the significance of Pohokura, accounting for about 39% of New Zealand’s total gas reserves, and the significance of the partners, together controlling about 77% of those reserves, that were considered critical competition issues.
“Other parties with other fields are very unlikely to raise the same competition concerns.”
Rebstock also said the commission was investigating whether the five big electricity generator-retailers were abusing their market power, keeping prices high and new players out.
The commission had hired a United States expert on market power, Professor Frank Wolak of Stanford University, to help analyse the data supplied to it by the big power players – Meridian Energy, Contact Energy, Genesis Energy, Mighty River Power and TrustPower.
She said the commission investigation should be completed by the end of the year and that if it found any misuses of market power, it would initiate court action against the players concerned.
