The new approval comes following the recent inclusion of the Australian Gas Light Company as an equity partner in the project, which will involve the construction of a 4000km gas pipeline linking Australia with PNG.
In handing down its decision, the ACCC again confirmed it would only give the project participants exemption from normal anti-competition laws for a period of 16 years rather than the 30 years previously requested.
A draft determination was issued in January, which proposed to grant the project participants exemption from certain anti-competition laws.
“The project will bring a new source of gas supply to eastern Australia and with it substantial public benefits. The ACCC is satisfied that the public benefits outweigh an anti-competitive detriment,” ACCC commissioner Ed Willet said Monday.
“The ACCC shared the concerns raised in public submissions regarding the joint venture partners’ proposal that authorisation should continue for the life of the project (about 30 years).
“Nevertheless, the ACCC agrees with the applicants that equity holders and the project’s financiers require a reasonably long-term authorisation in order for the project, which involves substantial up-front investment, to proceed and the public benefits to be realised. Accordingly, the ACCC has granted authorisation for 16 years.”
The ACCC also revealed project participants had agreed to certain measures to control the possibility of any form of anti-competitive behaviour.
“The applicants demonstrated a willingness to address concerns about the possibility of commercially sensitive information being used in an anti-competitive manner and have agreed to establish ring-fencing measures to restrict the transfer of commercially sensitive information concerning the project.”
In a preliminary decision handed down in January, the ACCC noted that “such conduct would normally breach the Trade Practices Act 1974” but the commission had decided that the public benefits of the project outweighed any “anti-competitive detriment”.
Willett previously told PNGIndustryNews.net the commission had to adopt a cautious approach, given some of the participants were also producers within the Australian market.
The ACCC said it had consulted widely with interested parties and the Australian Energy Regulator in making the decision.
Participants in the massive project, which is expected to pump first gas to Australia by 2009, include ExxonMobil, Oil Search, landowner group Minerals Resources Development Company, the Merlin Petroleum Company and AGL.
In a presentation last week, Oil Search, which currently holds a 44.2% stake in the project, said a sanction decision was expected “mid-year”.
Oil Search said it currently had firm and conditional sales contracts in place for production of between 155-229 petajoules of gas per annum. Total production capacity has been flagged for more than 250PJ pa and up to 300PJ pa.
Discussions regarding the possible re-entry of Santos to the project were also said to be ongoing.
