MELBOURNE, April 22 (UPI) -- A competition watchdog in Australia said it was growing concerned by the tight market control from a few gas players and an uncertain supply outlook.
The Australian Competition and Consumer Commission issued its report Friday on a year-long investigation into the regional gas market. It found suppliers as well as pipeline operators were exploiting their market positions to the detriment of its buyers and industry customers.
Watchdog group chairman Rod Sims said in a statement the introduction of liquefied natural gas in Australia, which exposes the national market to international pressures, the steep drop in crude oil prices and regulatory uncertainty has created a "triple whammy" for the industry.
Regarding LNG, Sims said the future is uncertain as domestic demand forecasts suggest a need for extensive development of national reserves. The long-term outlook is uncertain because of lingering pressure from lower energy prices.
"Some suppliers have taken advantage of this supply uncertainty and potential shortfalls to increase prices and implement more restrictive non-price terms and conditions," he said in a statement.
Some end users in southeastern states like Victoria, the report said, may be faced with steep price increases for natural gas if market fluidity doesn't improve.
The commission noted that it was taking a particular interest in a marketing joint venture controlled by Exxon Mobil and Australian energy and mining giant BHP Billiton, which is suspected of monopolizing its position in certain regional gas markets.
"Confidential bilateral negotiations remain the norm for both gas supply and transportation contracts," Sims said. "The lack of consistent, publicly available data on the sector is an impediment to participants, investors, and policy makers."
The report calls on the government to enact measures to bring new gas supplies to domestic markets, increase regulation over some sectors and open up the industry to more public scrutiny.