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The Australian Competition & Consumer Commission has called for...

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    The Australian Competition & Consumer Commission has called for the lifting of east coast gas bans and warned against the introduction of domestic gas reservation policies, in a long-awaited report to be released today.
    After a year using special powers of investigation to investigate east-coast gas markets, where demand has rapidly tripled thanks to $70 billion of LNG plants built at Gladstone, the competition watchdog’s report and recommendations will be released by Small Business Minister Kelly O’Dwyer.
    The ACCC has also recommended foreign and big gas producers give more detailed information on reserves and that tougher regulations are applied to the APA Group-dominated gas pipeline sector.
    “There has been unprecedented change in the east-coast gas market over the last four years, with the development of liquefied natural gas facilities in Queensland,” ACCC chairman Rod Sims says in the report. “The changes have created winners and losers and increased uncertainty.”
    A major cause of uncertainty is onshore exploration bans and regulatory restrictions in NSW, Victoria and Tasmania and a proposed fracking ban in the Northern Territory.
    “While the inquiry acknowledges that there are understandable reasons for policy positions like moratoria, blanket moratoria and regulatory uncertainty act to curtail gas exploration and new production,” Mr Sims says, while recommending projects be reviewed on a case-by-case basis.
    The ACCC says gas reservation policies should not be introduced, “given their likely detrimental effect already on uncertain supply.”
    Federal Resources Minister Josh Frydenberg said he would discuss the report with his state counterparts before the COAG Energy Council meeting in July. “The report makes clear that unless the commonwealth and state governments work together to address supply-side constraints, consumers and industry will bear the cost of higher gas prices and less reliable supply,” he said.
    On pipelines, the ACCC says regulations do not constrain the exercise of market power. “While the pipeline sector is responding to the changing dynamics and offering new services, some pipeline operators are engaging in monopoly pricing,” Mr Sims says.
    “The regulatory regime is not fit for purpose for the gas pipeline sector and pipeline pricing is significantly unconstrained.”
    The ACCC has recommended that the COAG Energy Council toughen tests for regulation of gas pipelines if pipelines have substantial market power.
    Mr Sims has targeted a long-held gripe of gas buyers that there is no consistent reporting of gas reserves from foreign and bigger players. “Gas users lack clear insight into actual reserve positions when negotiating for new supply contracts, which provides an advantage to large incumbents with greater knowledge of the market and reserve positions,” he says.
    Reserve reporting from the Bass Strait joint venture of Exxon Mobil and BHP Billiton has been a long-time gripe of gas buyers and other producers. “All explorers and producers, including non-listed ASX companies, should report consistent reserve and resource information across the east coast gas market,” the ACCC says in its recommendations.
 
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