The Australian Competition and Consumer Commission (ACCC) has assisted in a deal to open up competition to access a delivery and storage point for crude oil in Brisbane, Queensland.
The access requirement has been incorporated into a new lease agreement for the Lytton Tank 1020 storage facility, comprising a 300,000 barrel storage tank, truck unloading facilities and associated pipeline infrastructure, located near the Port of Brisbane.
From 1 September, the new lessee, a consortium of companies comprising IOR Terminals, Beach Petroleum (Cooper Basin) and Mosaic Oil Qld, must negotiate commercial terms with prospective users of the facility.
The access arrangement follows a tender process managed by the Port of Brisbane Corporation.
The access arrangement should assist the States petroleum industry by allowing competitors to use the Lytton facility at commercially realistic rates.
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, ACCC chairman Graeme Samuel says.
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.
Santos acts as operator, and has ownership interests in, various crude oil pipelines with a range of joint venture partners.
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.
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 addressed independent oil producers' concerns 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 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.