Prime Mover Magazine

Fuel supply cooperation to continue during COVID-19

Viva Energy is among a group of energy and oil companies that have been authorised to continue cooperating on measures to improve the security of fuel supplies during the COVID-19 pandemic.

The authorisation was granted by the Australian Competition & Consumer Commission (ACCC) and allows the Australian Institute of Petroleum (AIP) and major oil refiners to coordinate arrangements to address fuel supply issues in Australia arising as a result of the pandemic, and facilitate the efficient use of refining and fuel storage capacity during the pandemic.

The pandemic continues to impact on Australia’s fuel supply chain, according to the ACCC, causing unpredictable changes in demand for fuel and creating a potential for major disruptions to the domestic and international fuel supply chains.

“We believe that allowing fuel companies to coordinate fuel delivery, processing and storage if there is a critical supply disruption as a result of the pandemic, will support the fuel sector to ensure the supply of fuel products in Australia is secure and reliable, and reduce the risk of shortages,” said ACCC Commissioner, Stephen Ridgeway.

“While we acknowledge there are some risks the conduct may reduce competition, the limited scope and duration of the authorisation, and the reporting conditions mean the risk is low.

“Overall, the benefits of allowing parties to work together to secure the supply of fuel products to Australian businesses and consumers outweigh any potential detriments," he said.

This final authorisation, which was granted after seeking feedback from interested parties, continues an interim authorisation first granted on 3 April 2020. It is subject to conditions and expires on 31 March 2021.

The ACCC has authorised the conduct for six months, rather than the twelve months sought by the applicants, as the ACCC is not convinced that the longer period is required for the authorisation.

“We think that the effects of COVID-19 on the fuel sector may sufficiently dissipate in six months. We believe the shorter period of authorisation is appropriate to deal with the impacts of the pandemic and will minimise the risk of longer-term impact on the fuel markets,”said Ridgeway.

The authorisation applies to AIP (the industry’s peak body), its members (BP Australia, Caltex Australia, Mobil Oil Australia and Viva Energy Australia) and any future parties wishing to participate in the conduct, which must first be approved by the ACCC.

Under the conditions of authorisation, AIP must provide minutes of any relevant meetings and seek approval from the ACCC to add future parties to the authorisation.

The authorisation does not allow the parties to make any price agreements or to exchange any commercially or competitively sensitive information relating to marketing or sales activities.

The authorisation will come into force on 2 October 2020, if no application for review of the determination is made to the Australian Competition Tribunal.

Earlier this year a Request for Information (RFI) was opened by the Federal Government on the subject of increasing Australia's domestic fuel storage capacity.

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