The Australian Competition and Consumer Commission (ACCC) has stated that it will not oppose Australia Pacific LNG’s (APLNG) proposed acquisition of the Ironbark coal seam gas project from Australian energy company, Origin Energy Limited (Origin).

APLNG is a large gas producer with significant gas tenements in eastern Australia. The company supplies almost 30 per cent of the gas going into the east coast market and processes the balance of its gas for export at its liquefied natural gas (LNG) facility near Gladstone, Queensland.

Origin is a 37.5 per cent shareholder in APLNG and is the upstream operator for APLNG – responsible for the development of its coal seam gas fields in the Surat and Bowen basins and the main transmission pipeline that transports the gas to the LNG facility near Gladstone.

Origin Energy ATP 788P Pty Ltd, also known as Ironbark, is an Authority to Prospect held by Origin which is located in the Surat Basin.

Ironbark is in the exploration and appraisal stage and is not currently producing. Origin estimates Ironbark has 129 petajoules of 2P reserves and 192 petajoules of 3P reserves.

In February 2019 Origin entered into an agreement to sell its Ironbark project to APLNG for $231 million. At the time Origin CEO, Frank Calabria said the sale ‘represents the best way for Origin to maximise value from Ironbark’.

“APLNG is able to realise additional value from the asset by utilising its existing nearby gas and water processing infrastructure to efficiently bring the gas to market,” he said, “Origin will derive value from the development of the Ironbark asset through its investment in APLNG.”

On Wednesday 22 May, the consumer watchdog said that in reaching its decision to not oppose the proposed acquisition, the ACCC considered the effect of the acquisition on domestic gas supply and the level of competition between suppliers of domestic gas.

ACCC Commissioner, Roger Featherston also commented that the ACCC had regard to the relatively small size of the Ironbark project.

“We also considered the alternatives available to Origin to either sell Ironbark to someone else or develop the project itself,” he stated.

Mr Featherston also said that in the ACCC’s view, neither of these alternatives would have led to a significantly different outcome for domestic gas users from that of the sale of Ironbark to APLNG.

The ACCC concluded that the proposed acquisition would be ‘unlikely to substantially lessen competition in any domestic gas market’.

“However, we have long voiced concerns about the challenges facing east coast domestic gas users and will continue to closely examine the acquisition of further gas reserves by major LNG producers and the likely impact on competition,” Mr Featherston concluded.