AGL inks three-year deal with BHP for Gippsland gas
AGL Energy has signed a deal with BHP to buy gas from Victoria’s Gippsland Basin.
AGL Energy has signed a three-year gas deal with BHP to buy 78 petajoules of gas from Victoria’s Gippsland Basin, just a day after one of its rivals EnergyAustralia agreed a pact to source gas from a planned LNG import terminal.
AGL’s 39-month deal starts in April 2020 and will supply its NSW and Victorian gas customers.
“AGL remains committed to securing cost-competitive gas supply for its customers from the domestic market where it is available and new gas supply from international markets through its proposed AGL gas import jetty project,” the company said in a statement.
The agreement highlights the different supply routes the nation’s big power retailers are pursuing to ensure they have sufficient supplies amid predictions the east coast gas market will tighten further in the early part of the next decade.
A continuing fall in Victoria’s offshore gas production may lead to restrictions placed on the state’s gas supply and the curtailment of gas-fired power for electricity generation on peak winter days from 2023, according to the Australian Energy Market Operator.
EnergyAustralia on Wednesday struck a $500 million-plus supply deal with Andrew Forrest’s planned LNG import terminal in NSW’s Port Kembla for 15 petajoules of gas starting in January 2021.
AGL — along with Origin Energy — were among customers also considering supply offtake from the iron ore billionaire’s development, shaping as the first Australian project to import LNG back to the nation’s shores.
However, AGL may instead prefer to wait and tap supplies from its own mooted LNG import plant at Victoria’s Crib Point which could be operational by 2021 subject to a final investment decision.
Australia became the world’s largest exporters of LNG last year but its willingness to ship huge quantities of Queensland’s gas to customers in Asia has led to a supply squeeze at home.
The growing cost of developing new gas fields, onshore production restrictions in NSW and Victoria and declining output from the Bass Strait have also contributed to the tight domestic market.