The Australian Competition and Consumer Commission (ACCC) will undertake an inquiry into the competitiveness of Eastern Australia’s upstream natural gas market.
The inquiry will consider wholesale gas prices in the context of Eastern Australia’s gas production, processing, transportation and storage infrastructure.
Releasing the terms of reference for the inquiry, Small Business Minister Bruce Billson said gas market participants have complained that a lack of transparency was hampering efforts to buy gas.
“Our wholesale gas markets are based on confidential bilateral contracts with a comparatively small number of suppliers and infrastructure owners,” Mr Billson said.
“Participants have complained about a lack of transparency in the gas market and the information asymmetry facing those trying to access gas.
“The Australian Government wants to ensure there is adequate competition to allow participants to operate. This ACCC inquiry will establish if Australia’s eastern gas market is operating effectively.”
Mr Billson said Professor Ian Harper’s recent Review of Competition Policy recommended a detailed review of competition in Australian gas markets and a recent Productivity Commission research report found a thorough investigation of market power issues was required before further policy intervention in upstream gas markets.
Industry and Science Minister Ian Macfarlane said “natural gas plays a critical and increasing role in Australia’s economy.
“Potential competition issues in Eastern Australia’s wholesale gas market were flagged in the Australian Government’s Eastern Australian Domestic Gas Market Study, and by the Victorian Gas Market Taskforce.
“The Energy White Paper also announced that the ACCC will investigate the effectiveness of competition in the gas market, particularly upstream.
“I am confident that we have the gas resources to meet domestic demand and gain the economic benefits of exporting gas. Ensuring that our gas markets are competitive is vital to promoting gas resource investment.”
Further details on the inquiry are available on the Australian Competition and Consumer Commission website
Terms of Reference
I, Bruce Billson, Minister for Small Business, pursuant to section 95H(1) the Competition and Consumer Act 2010, hereby require the Australian Competition and Consumer Commission to hold an inquiry into the competitiveness of wholesale gas prices and the structure of the upstream, processing, transportation, storage and marketing segments of the gas industry. The inquiry may include but not be limited to Victoria, New South Wales, the Australian Capital Territory, South Australia, Queensland and Tasmania.
Matters to be taken into consideration in the inquiry shall include, but not be restricted to:
- the availability and competitiveness of offers to supply gas and the competiveness and transparency of gas prices
- the competitiveness of, access to, and any restrictions on market structures for gas production, gas processing and gas transportation
- the significance of barriers to entry into the upstream production sector
- the existence of or potential for anti-competitive behaviour and the impact of such behaviour on purchasers of gas
- transaction costs, information transparency including gas supply contractual terms and conditions, and other factors influencing the competitiveness of the markets
This is not to be an inquiry in relation to supply by any particular person or persons. The inquiry should not consider competition in gas retail markets.
The inquiry is to be completed and a report submitted to me in early 2016.