Australia: APA, ExxonMobil, BHP angered by ACCC calls for pipeline regulation

Australia’s biggest gas pipeline operator APA Group and the Bass Strait gas-producing partnership of ExxonMobil and BHP have lashed out at key recommendations in the Australian Competition & Consumer Commission’s eastern states gas market report.

APA had reason to feel particularly annoyed as the ACCC’s call for greater regulation of pipelines saw it suffer a $290 million sharemarket hit, with its shares closing 26 or 2.9 per cent, lower at $8.58.

In its report the ACCC said greater regulation of pipelines was needed, and there was evidence of monopoly pricing giving rise to higher prices and economic inefficiencies.

The year-long investigation by the ACCC was in response to growing fears that the tripling in gas demand in the eastern seaboard market caused by the $70 billion development of three LNG export projects in Queensland would lead to gas shortages and higher prices.

APA managing director Mick McCormack lashed out at the ACCC, saying it was perverse for it to consider that more regulation of the pipeline industry will contribute to solving the supply challenge.

He also rejected any suggestions of monopoly pricing, saying pipeline tariffs were the result of negotiations with “commercially strong and savvy counterparties’’ capable of looking after themselves. Chief Executive of the Australian Pipelines & Gas Asso­ciation Cheryl Cartwright said the ACCC had shown an inclination to regulate infrastructure even though that would do little to address the fundamental problem in the system: how to ensure there was enough gas available for both export and domestic users.

“It’s important to remember what triggered the inquiry — a tightening demand-supply balance and rising wholesale gas prices. Changing regulation for gas transportation does not solve those problems,’’ she said.

Full Content: The Australian

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