ExxonMobil, BHP end Australia gas sales joint venture

ExxonMobil Corp and BHP Billiton Ltd have agreed to end a nearly 50-year-old gas marketing joint venture in Australia, bowing to pressure from the nation’s competition watchdog amid concerns about gas supply and soaring prices.

The Australian Competition and Consumer Commission (ACCC) and the two companies said on Monday they would start marketing their gas from the Gippsland Basin separately, starting in 2019.

“The ACCC was concerned that the joint marketing arrangements were likely to have resulted in a substantial lessening of competition in the market for the supply of gas to buyers in the southern states,” ACCC Chairman Rod Sims said in a statement.

The commission raised concern last year about the tight grip the Gippsland Basin joint venture, the biggest producer in the country’s southern states, had on the market. The ACCC flagged it might force the firms to sell their gas separately.

But an analyst at energy consultant Wood Mackenzie said separate marketing of the gas was unlikely to soften domestic gas prices by that much.

Gas prices were effectively being determined by the liquefied natural gas export market, not the ExxonMobil-BHP joint venture, analyst Saul Kavonic said.

“However, the move will add an administrative burden and potentially complicate and delay expansions to gas supply from the [Gippsland Basin] project in the future,” Kavonic said.

The companies had long argued that joint marketing actually saved costs. ExxonMobil had warned in April 2016 that any unwinding of joint marketing “could make it more difficult to invest and bring on new supplies in Gippsland.”