Photo by: Bloomberg
PERTH (miningweekly.com) – Australian oil and gas producers could be hit with penalties of up to A$50-million if they are found not to be in compliance with the new Gas Market Code.
The Australian Competition and Consumer Commission (ACCC) on Tuesday published compliance and enforcement guidelines on the new Gas Market Code, which came into effect on July 11 this year.
The new Code includes a A$12/GJ price cap, and minimum conduct, process and transparency obligations that together support good faith negotiations to allow gas producers and users to enter supply agreements on "reasonable terms".
The Code also contains an exemptions framework that is designed to incentivise producers to commit more gas to the east coast market. The framework allows government Ministers to grant gas producers an exemption from the Code, including if the Ministers are satisfied with producers’ voluntary but enforceable commitments to supply gas to domestic gas users.
“We have developed these guidelines to help the gas industry to understand their compliance obligations under these new laws, before the transition period ends,” ACCC commissioner Anna Brakey said.
“There are serious penalties for non-compliance with the Code’s requirements, and we will use our full investigative and enforcement powers in response to alleged contraventions or attempts to circumvent them.”
There are three tiers of pecuniary penalties for companies that breach the Code. The maximum penalty is up to the greater of A$50-million or three times the value of the benefit obtained, or, if that value cannot be determined, 30% of the company’s turnover during the period it engaged in the conduct.
Requirements under the Code and the Competition and Consumer Act relating to compliance with the price cap, good faith negotiations and avoidance schemes, as well as the conditions attached to any exemptions, will attract the highest penalties as they are critical to its effective functioning, Brakey said.
Under the Code, gas producers are also required to report certain information to the ACCC, including their volumes of available gas, expressions of interest, offers to the market and supply agreements.
To assist producers with their obligations, the ACCC will soon release information for the gas industry on the record-keeping and reporting requirements of the Code.
The oil and gas industry has previously called on the federal government to focus on new supply in order to secure domestic gas, with the Australian Petroleum Production and Exploration Association saying the test for the mandatory Code of Conduct would be if it could support investment into new supply.