APA in gas supply plan with Cooper Energy
APA is set to buy a gas-processing plant in Victoria as part of a broader deal to boost supplies to the east coast.
Natural-gas infrastructure operator APA Group is in talks to buy a gas-processing plant in Victoria as part of a broader deal to help develop a gas project with Cooper Energy to drive new supplies to the country’s eastern seaboard.
APA (APA) said it was in exclusive negotiations to acquire and upgrade the Orbost gas processing plant from Cooper Energy, which would in turn invest in developing the offshore Sole gas project off Victoria. As part of the deal, the companies would enter a pact for the processing and delivery of gas to market by APA.
The talks come amid concerns southeastern Australia faces a gas-supply crunch. The launch and ramp-up in recent years of multi-billion dollar gas-export facilities in Queensland has opened the market to international pricing, but has coincided with a sharp pullback in exploration and drilling in recent years as energy companies have cut costs amid a slump in global oil-and-gas prices and as some states have pushed against unconventional gas extraction.
The companies said APA would buy the Orbost plant for an amount that reflected Cooper’s expenditure on the facility relating to the Sole project, and APA would then spend about $250 million expanding and upgrading Orbost with an aim of eventually using it as a hub for other new gas projects.
Cooper plans to spend about $355 million developing Sole, including drilling, subsea infrastructure and offshore pipelines.
APA had been seeking opportunities to fund and develop new infrastructure projects, said Mick McCormack, managing director of APA. He said the company had undertaken extensive technical and commercial due diligence on the deal over the past few months, and believes Sole is a potential significant source of new gas supply for the eastern Australian market.
Cooper’s Sole gas project has advanced to the final stage before commitment, with the heads of agreement with APA and finalisation of a field development plan.
Dow Jones Newswires