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Gas Contract Authorisation Appeal Upheld

Gas Contract Authorisation Appeal Upheld

Santos Ltd announces that the Australian Competition Tribunal (ACT) has, on appeal by the South Australian Cooper Basin Producers (Producers), ordered that the determination of the Australian Competition and Consumer Commission (ACCC) revoking Authorisation No. A90424 be set aside.

This decision relates to the long-term contract (Letter of Agreement) under which the Producers supply Cooper Basin gas at Moomba in South Australia to AGL for sale to customers in Sydney and other centres in New South Wales and the Australian Capital Territory.

In 1986 the then Trade Practices Commission granted an Authorisation in respect of the AGL Letter of Agreement under the Trade Practices Act.

On 27 March 1996, the ACCC revoked the 1986 Authorisation and granted a new, but substantially limited, Authorisation.

The Producers appealed this decision to the ACT which has found in the Producers favour. The result is that the Letter of Agreement remains authorised under the Trade Practices Act, pursuant to the original 1986 Authorisation.

Commenting on the significance of the decision, Santos Executive General Manager – Commercial, Mr. John McArdle, said:

“The decision is viewed by the Producers as constituting due recognition of the important role played by long term contracts in the development of the Australian gas industry and of the substantial investments made in reliance upon the security of those contracts over the life of those contracts. It further warns against an adverse assessment of particular clauses in a long term contract being made in isolation from a consideration of the whole of that contract and of the overall benefits provided over the life of that contract. In the context of the Letter of Agreement, this means, for the gas consumers of NSW and the ACT, the continuation of the reliable and secure supply of gas from the Cooper Basin, which those consumers have enjoyed for the past twenty years.”

The interests of the South Australian Cooper Basin Producers are:

  • Santos Group 59.75%
  • Delhi Petroleum Pty Ltd 20.21%
  • Boral Energy Resources Ltd 13.19%
  • Gulf (Aust) Resources NL 4.75%
  • Cultus Group (Basin Oil NL) 2.10%