SYDNEY -(Dow Jones)- Australia's competition watchdog Thursday said it will allow partners building the Gorgon LNG project offshore Western Australia state to jointly market gas from the massive terminal into the domestic market.
The Australian Competition and Consumer Commission, however, said authorization will only be granted until Dec. 31, 2015, which it said is a shorter period than sought by the partners, which include Chevron Corp. (CVX), Exxon Mobil Corp. (XOM) and Royal Dutch Shell PLC. (RDSB.LN).
The regulator said it recognizes that a number of large gas customers opposed joint marketing for fear it would reduce competition and push up prices.
"However, the ACCC is of the view that due to the current characteristics of the WA natural gas market, this important source of new gas supply in WA is likely to commence earlier and in larger volumes under joint marketing than would otherwise be the case," Acting Chairman Peter Kell said in a statement.
Kell said the WA market has experienced an increase in demand for natural gas in recent years with corresponding price increases.
"The Gorgon project will provide a welcome new source of supply that will help meet this growing demand and diversify WA's energy supply sources," he said.
But by the end of 2015, the ACCC said the WA gas market may develop "the necessary characteristics to support separate marketing".
The regulator said the Gorgon partners will be able to reapply for authorization after the deadline and that its decision would depend on the dynamics of the domestic gas market at the time.
The Gorgon partners intend to start producing LNG in 2014.
-By Ross Kelly, Dow Jones Newswires; 61-2-8235-2957; ross.kelly@dowjones.com