SYDNEY - [AAP] BHP Billiton (ASX: BHP) and Esso Australia Resources will separately market their share of gas produced under the Gippsland Basin Joint Venture (GBJV), following a consumer watchdog investigation.

The two energy companies have been marketing gas from the offshore fields in Victoria's Gippsland Basin, to customers under a 50:50 joint venture since production started in 1969.

But on Monday, the Australian Competition and Consumer Commission said the pair had provided court enforceable undertakings to separately market their respective share of gas from January 2019.

The decision was prompted by an ACCC investigation which found the joint arrangement was likely to have resulted in a substantial lessening of competition in the market for the supply of gas to buyers in the southern states.

The investigation began on the back of the ACCC's East Coast Gas Inquiry in 2015, which identified a significant reduction in the level of competitive constraint in southeastern Australia.

The watchdog alleges the BHP-Esso JV's market power as a gas supplier in the southern states increased significantly from 2010 to 2015.

ACCC chairman Rod Sims said wholesale gas buyers in the region had become highly reliant on the GBJV--the largest gas producer in the southern states--as their primary supply source.

"We believe that competition in this market was negatively affected by the elimination of independent rivalry between BHP and Esso," Mr Sims said in a statement on Monday.

The ACCC said that following the agreed separation, buyers will have the benefit of competing and potentially different offers from Esso and BHP.

"We expect gas buyers will receive improved prices and contract terms for supply," Mr Sims said.

"It is vital to commercial and industrial customers that this sector becomes more competitive."

BHP believes it has co-operated with the watchdog and complied with the Competition and Consumer Act at all times.

It said the move will allow it to leverage its significant experience in marketing oil and gas products globally and ends uncertainty for BHP and the market.

"GBJV has reliably met the needs of the eastern Australia domestic gas market for around 50 years.

However, the market has evolved significantly since the inception," BHP said in a statement.

"The decision to move to separate marketing recognises that evolution and the mature stage of asset life."

 

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