BHP, ExxonMobil Split Aus JV Gas Sales

BHP Billiton and US ExxonMobil (Esso) will separately market their share of gas produced under the Gippsland Basin Joint Venture (GBJV) from January 1, 2019, Australian Competition & Consumer Commission (ACCC) said December 18. 

The ACCC investigated the effect of joint marketing arrangements between BHP and ExxonMobil during the period from late 2013 to 2015, after concerns arose about those arrangements during the ACCC’s 2015 East Coast gas market probe.

“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. We believe that competition in this market was negatively affected by the elimination of independent rivalry between BHP and Esso,” ACCC chairman Rod Sims said, adding that the joint venture is the largest producer of gas in the southern states and wholesale gas buyers in this region have become highly reliant on the joint venture as their primary source of supply.

BHP and Esso have each committed to cease jointly negotiating and entering into gas sales agreements for the supply of GBJV gas from January 1, 2019, following a transition period that will enable the parties to put separate marketing arrangements into place, ACCC said.

“The ACCC’s intervention should improve the competitive landscape for gas buyers on the east coast. We expect gas buyers will receive improved prices and contract terms for supply,” Sims said.

The GBJV is a 50:50 joint venture between BHP and ExxonMobil for the production of crude oil and natural gas at the offshore fields in the Gippsland Basin in Victoria. The GBJV was established by BHP and ExxonMobil in 1964 and has been jointly marketing its gas to customers since it began production in 1969, at which point joint marketing was still the norm.