The access arrangement follows a tender process managed by the Port of Brisbane Corporation.
“The access arrangement should assist the Queensland petroleum industry by allowing competitors to use the Lytton facility at commercially realistic rates,” ACCC chairman Graeme Samuel said today.
“Access to the Brisbane market, in particular the BP and Caltex refineries at Lytton, plays a critical role in the continued viability of emerging Queensland oil producers.”
“The new lease granted by the Port of Brisbane Corporation will provide these companies with much needed certainty for investment and job creation.”
From August 2007 Queensland oil producers were required to truck unrefined crude oil from Brisbane following the unplanned closure of the Moonie to Brisbane crude oil pipeline. This pipeline is owned by the Moonie Pipeline Company, a wholly owned subsidiary of Santos Ltd.
The ACCC received complaints from producers about the terms of access to truck unloading services which Santos established at its oil storage facilities at Lytton, as part of an emergency response to that unplanned closure, to allow crude oil production to continue. These storage facilities included the Lytton Tank 1020 facility, then operated by Santos on behalf of its joint venture partners.
Independent Queensland oil producers were concerned that if they were unable to access Lytton on commercially viable terms, their most commercially attractive alternative may be to transport all their crude oil from Jackson in south west Queensland to the Moomba processing plant in north eastern South Australia, where it would be sold to the South Australian Cooper Basin Joint Venture to enable it to be conveyed to Port Bonython on the coast of South Australia near Whyalla.
Third parties do not have independent access to the Moomba to Port Bonython pipeline, which transports oil and gas to market in South Australia, as the South Australian Cooper Basin Joint Venture considers the pipeline to be an integrated part of its larger production facility.
Mr Samuel said independent Queensland oil producers were concerned pipeline tariffs could be determined without reference to any real competitive alternative.
“This could increase the transportation costs of independent producers and oil refiners operating in southern Queensland and may discourage further oil exploration projects in the region,” Mr Samuel said.
Santos acts as operator, and/or has ownership interests in, various crude oil pipelines with a range of joint venture partners. As a result, Santos has some control over market access for crude oil and condensate for Cooper/Eromanga Basin in South Australia and Queensland, and in the Surat Basin in Queensland.
In July 2008 Santos commissioned a new pipeline from Jackson to Moomba which independent producers feared would make the existing Queensland pipeline system unviable.
Santos fully cooperated with the ACCC’s inquiries and offered to resolve the matter commercially.
Santos undertook to address independent oil producers’ concerns including by making the terms of access to the Tank 1020 facility truck unloading services more transparent, and ensuring independent oil producers had short term and long term security of access to these facilities.
As part of that process, the assets at the Tank 1020 facility, comprising a 300,000 barrel storage tank, truck unloading facilities and associated pipeline infrastructure, were sold to the new consortium by Santos and the former lessee, a joint venture in which Santos and its subsidiaries hold the majority interest.
“The ACCC commends all parties for facilitating a fair and competitive environment for prospective users of the storage facility,” Mr Samuel said.