Gorgon JV partners to jointly market gas

Aluminium giant Alcoa says gas prices will rise sharply because the competition watchdog has allowed the Gorgon project participants to jointly market natural gas to Western Australia's domestic market.

The Australian Competition and Consumer Commission (ACCC) on Thursday allowed the Chevron-led joint venture to collectively market natural gas to domestic customers in WA.

While this amount represents about five per cent of the project's total output, Alcoa says it is concerned that some of the world's biggest energy companies can now jointly sell gas into the well established WA market.

The rest of the gas from Gorgon, which is being developed on Barrow Island offshore from Karratha, will be sold as liquefied natural gas to Asian customers under separate marketing arrangements.

"Alcoa, like the DomGas Alliance, is very concerned that in allowing some of the world's biggest oil and gas companies to jointly sell gas to the well established Western Australian market, gas prices will rise dramatically for all consumers including small business and householders," Alcoa said in a statement.

Members of the DomGas Alliance are major industrial users of gas and include Fortescue Metals Group Ltd, Newmont Mining Corporation and state electricity retailer Synergy.

"Western Australians already pay some of the highest prices in Australia for gas and today's authorisation by the ACCC will see these prices increase significantly over the coming years," Alcoa said.

It said the ACCC seemed to not care that industry, power generators, infrastructure operators and gas consumers were opposed to the move.

The ACCC noted in a statement on Thursday that several large gas customers had voiced their opposition.

"However ... 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 ACCC chairman Peter Kell said.

"Were the Gorgon partners to attempt to separately market, the ACCC considers they would face significant risks that may result in them deferring production, producing lower volumes of gas or increasing prices to reflect higher risk."