Price review mechanisms in a global market*
D. Thomas A and C. Douglas AMinter Ellison.
The APPEA Journal 51(2) 678-678 https://doi.org/10.1071/AJ10058
Published: 2011
Abstract
The east Australian gas market (including SA) has, throughout its history, been isolated with limited connectivity from the gas fields that supply its major centres. With the arrival of CSG, imminent LNG exports and recent increased connectivity between gas fields and customers, the east Australian gas market has undergone substantial change. Against this background, it is timely to reconsider the approach to price review mechanisms contained in long-term gas supply agreements—particularly what market will be considered in any review process and what evidence will be available to the parties to a price review (in a cost-effective way) to allow consideration of movements in that market for the purposes of re-setting the price to be paid by a customer.
In this extended abstract, the authors discuss the effects of CSG developments and increased connectivity on the eastern gas market along with the effect LNG can have, particularly by reference to its impact on the WA gas market. A critical analysis of various price review mechanisms is undertaken with a view to identifying appropriate price review processes and criteria for the future along with reviewing the fundamentals of a price review process—specifically, the need for any price review and associated arbitration to give rise to a justiciable dispute such that the process attracts the operation of the relevant Commercial Arbitration Act and overriding Court supervision for the purposes of any necessary subpoenas or reviews of decisions.
David has 30 years’ experience in dispute resolution and litigation with extensive expertise in the oil and gas industry. He has significant experience in acting for gas producers throughout Australia in relation to the conduct of gas price reviews. A number of these matters have been referred to arbitration. One of these matters involved applying to the Supreme Court of Queensland for access to third party documents, in what is now a leading case in this area. These cases require an understanding of the structure of the gas industry and consideration of terms of many gas supply arrangements at each level of the industry. David also practises in the area of international maritime law advising on shipping and chartering arrangements as well as resolution of disputes arising out of those arrangements. |
Chris Douglas is a Senior Associate at Minter Ellison in Brisbane. Chris’ practice focuses on the areas of commercial disputes, with a focus on price review arbitrations and international trade law. Chris advises a range of national and international clients in respect of commercial issues which are or may become litigious. Chris’ experience includes Supreme and Federal Court litigation, proceedings in Tribunals (including the AAT) commercial arbitration and mediation across a number of Australian jurisdictions. Chris has also represented clients in matters involving foreign jurisdictions including the United Kingdom and Fiji. Chris also practises in the area of international maritime law advising on shipping and chartering arrangements as well as resolution of disputes arising out of those arrangements. Chris has experience in cargo disputes, cargo reshipments, admiralty matters including arrest of vessels and giving advice with respect to chartering operations. Chris’ skills in these areas have been recognised by invitations to guest lecture in the area of shipping law and international arbitration at the University of Queensland. |
References
ACCC, State of the Energy Market, 2009, p.254.Proved reserves are those with at least a 90% probability of commercial recovery. Probable Reserves are those with at least a 50% probability of commercial recovery—based on a geological and engineering analysis.
EnergyQuest, Energy Quarterly, August 2009.
ACCC, State of the Energy Market, 2009, p.234.
ACCC, State of the Energy Market, 2009, p.233.
ACCC, State of the Energy Market, 2009, p.233.
EnergyQuest, Energy Quarterly, August 2009.
Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd (2008) QCA 160 at (10).
Qld Power Trading Corp v Xstrata Qld Ltd (2005) QCA 477 at (68).
For example, in the case of Northbuild Constructions Pty Ltd v Discovery Beach Project Pty Ltd (2008) QCA 160 the Court had to consider whether, by reason of certain agreements reached between the parties subsequent to the striking of an agreement that referred certain disputes to expert determination, the process changed from one of expert determination (as required by the terms of the contract) to one of arbitration.
Xstrata Queensland Ltd v Santos Ltd (2005) QSC 323 at 38.
See for example, s 17 Commercial Arbitration Act, 1990 (Qld).
ACIL Tasman, ‘Australia’s natural gas markets: the emergence of competition?’, essay in AER, State of the Energy Market 2008, Melbourne 2008, p.47.
