LNG producers to coordinate WA, NT maintenance activities

The Australian Competition and Consumer Commission (ACCC) has authorised Chevron, INPEX, Shell and Woodside Petroleum to coordinate maintenance activities at their liquefied natural gas (LNG) facilities in Western Australia and Northern Territory.

The four LNG producers compete for a limited pool of skilled contractors and specialised equipment to conduct scheduled maintenance, according to the ACCC.

Rod Sims, ACCC chairman, said the LNG producers could now schedule maintenance together without risking breaching competition laws, reducing concurrent work at their facilities.

“This will improve efficiency and maximise LNG production,” Sims said.

The ACCC noted that some producer facilities converted natural gas into LNG for export, while some facilities also supplied, or had the ability to supply, natural gas to wholesale domestic markets.

When the LNG facilities are offline for maintenance, some gas may be directed to these wholesale markets, the ACCC added.

“If producers become aware of each other’s LNG facility shutdowns as part of this agreement, this information might give them an advantage in gas trading markets,” Sims said.

To address this, the ACCC has imposed a condition of authorisation requiring the LNG producers to publicly disclose maintenance schedule information that they share with each other.

“Information is a crucial component of creating efficient, well-functioning markets. Market-sensitive information disclosed to competitors as part of this process should be available to all participants,” Sims said.

Authorisation is granted for five years, rather than the 10-year period sought by the LNG producers.

“With the evolving nature of the gas markets, there is significant uncertainty about the impact of the proposed conduct on related markets. If the parties wish to seek reauthorisation in 2023, the ACCC will test whether the expected benefits and detriments have arisen and to assess the effectiveness of the condition,” Sims said.