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APA — Australian Pipeline Trust — ABARE Outlook 2001: Capturing Growth Opportunities
21 slides from APA's conference presentation, March 2001
Slide 1: Outlook 2001: Capturing Growth Opportunities
Slide 2: Gas Supply and Transmission: The Issues
Australian Pipeline Trust Gas Supply and Transmission The Issues Jim McDonald 2
Slide 3: A Caveat
Australian Pipeline Trust A Caveat “ Economists possess their full share of the common ability to invent and commit errors ……… Perhaps their most common error is to believe other economists.” George J. Stigler 3
Slide 4: Competition reform is work in progress
Australian Pipeline Trust ■ Competition reform is work in progress ■ Government should make policy ➡ Regulators should monitor compliance ■ We do not have it all wrong ➡ We do not have it all right ■ Government should do a sanity check ■ What should we do next 4
Slide 5: Gas for all and greater use of Gas
Australian Pipeline Trust “Gas for all and greater use of Gas” ■ Focus must shift to ➡ Efficient use of capital ➡ Encouragement of system expansion ➡ Encouragement of new pipelines ➡ Research to lower capital cost ➡ Reliability and integrity of existing pipelines 5
Slide 6: Hear the Tom Toms
Australian Pipeline Trust Hear the Tom Toms ■ Cracks in reliability of G & E systems ■ Foreign investors exit - disillusioned ■ Impact of OPEC pricing - Oil and LPG ■ Capacity overhang in power absorbed ■ Energy price volatility ■ California 6
Slide 7: Lynne Korsky - Acting Minister for Energy and Resources
Australian Pipeline Trust Lynne Korsky - Acting Minister for Energy and Resources “……with regulation that gives us the power to regulate prices (to the consumer) set by the companies if necessary.” 7
Slide 8: A perfect world
Australian Pipeline Trust A perfect world ■ Government(s) make policy ■ Regulator(s) monitor compliance ■ Commerce drives commercial outcomes 8
Slide 9: The way it is
Australian Pipeline Trust The way it is ■ Government(s) make regulators ■ Regulator(s) make policy ■ Commercial forces fight regulator(s) ■ 13 involved separate government agencies or creations 9
Slide 10: The missing link in gas reform is competition
Australian Pipeline Trust The missing link in gas reform is competition between a large number of gas producers. APPEA plan is “self-regulation.” 10
Slide 11: Producers test the risk appetite of other investors
Australian Pipeline Trust Producers test the risk appetite of other investors ■ Sub-contracting ➡ Pipelines offshore ➡ Floating production systems ➡ Plants ■ Increased net-back rent to wellhead 11
Slide 12: The regulator
Australian Pipeline Trust The regulator ■ Independent economic regulator ■ Balance the legitimate interests of ➡ Service providers ➡ Customers ■ Friction due perceived consumer focus 12
Slide 13: Industry concerns
Australian Pipeline Trust Industry concerns ■ The cost and process time of regulation ■ Inconsistency of decisions ■ Multi jurisdictions ■ Discretion ■ Limited appeal rights ■ Existing contracts 13
Slide 14: For mature pipelines, the issues are political
Australian Pipeline Trust For mature pipelines, the issues are political ■ Purchasers of government owned assets deal with real not theoretical balance sheets ■ Real dollars were paid for assets ➡ $4.5 Billion ■ AMP and Hastings Funds Management 14
Slide 15: The future looks good
Australian Pipeline Trust The future looks good ■ Major new gas supply - PNG, Timor ■ Review of Part IIIA of TPA ■ Review of Pipeline Access Code ■ Central West decisions 15
Slide 16: Re-write of Part IIIA TPA
Australian Pipeline Trust Re-write of Part IIIA TPA ■ Guidance stressing the importance of ongoing efficient investment ■ Constrain access regimes to services where there is demonstrable market failure ■ Clear access and pricing principles ■ Strengthened appeal provisions ■ TPA to punish monopoly ab
Slide 17: Re-write of Part IIIA TPA (cont')
Australian Pipeline Trust Re-write of Part IIIA TPA (cont’) ■ Guidelines to assess presence of competition ■ Regulators not to have conflicting roles ■ Voluntary undertakings for greenfields projects ■ Time limits on decisions ■ Upstream competition initiatives 17
Slide 18: National significance test
Australian Pipeline Trust “National significance test” ■ Victorian major system ■ Moomba - Adelaide ■ Dampier - Bunsbury ■ Ballera - Brisbane ■ PNG - QLD ■ Timor - Moomba 18
Slide 19: National Energy Policy Initiative
Australian Pipeline Trust National Energy Policy Initiative ■ Need incentives to switch to environmentally friendly gas ■ Value and create trade in emissions ■ Consider greenhouse in power generation ■ Remove or minimize impediments to gas fired generation 19
Slide 20: Negotiations for new pipelines
Australian Pipeline Trust Negotiations for new pipelines ■ Shell ■ AGL ■ Woodside ■ Petronas ■ Exxon ■ EPIC ■ Chevron ■ Duke ■ Phillips ■ Origin ■ BHPP ■ APT ■ Santos Commercial decisions should prevail. 20
Slide 21: Jim McDonald
Australian Pipeline Trust Jim McDonald Australian Pipeline Trust 21
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