Queensland Energy and Resources Insights

31 August 2005

Options for the development of the Australian wholesale gas market

By Dan Howard and Melissa Bentley.

Key Points:

On 2 August 2005, the MCE Standing Committee of Officials authorised the release of the final report on Options for the Development of Australian Wholesale Gas Markets prepared by the Allens Consulting Group.

The Report investigates possible options for the development of a wholesale natural market consistent with the principles for gas market development adopted by the MCE in December 2004. The options canvassed by the Report are:

  • Option 1 - the current market with organic development
    This option contemplates the market being left in its current form in terms of bringing about new developments to the wholesale gas market structure.
  • Option 2 - the current market with bulletin board facilities
    The market structure could be the same as Option 1 but would have contract trading bulletin board facilities similar to that operating in the Australian water market.
  • Option 3 - the city gate scheme
    This option is a proposal for a new spot market that builds upon the market structure already in place outside of Victoria. One feature of the spot market is that it could operate in relation to all transmission pipelines feeding into and out of a load centre, which the Report refers to as a "city gate".
  • Option 4 - extension of the Victorian model
    Option 4 involves the extension of the spot market model that operates in Victoria to cover some or all of the other major transmission pipeline systems.

Submissions were received to the draft of the Report by various industry participants, including Australian Gas Light Company and BHP Billiton and various forums were held as part of the consultation process.

The MCE has not yet signalled its intentions in relation to the report but we will keep you informed of any developments in relation to a national wholesale gas market.

For further information, please contact Dan Howard.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states or territories.