Gas supplier ENI ‘not meeting obligations’, PWC considering legal action

Power and Water Corporation is in the early stages of potential legal proceedings, alleging a critical gas supplier is ‘not meeting obligations’.

THE company supplying gas to the Northern Territory’s power plants has not been meeting its contractual obligations, Power and Water Corporation (PWC) officials have revealed.

The Henderson government struck a 25-year deal with ENI more than 10 years ago to supply gas from the Blacktip Gas Field, which was only recently heralded as having prevented the Territory from suffering the same energy crisis as the East Coast.

But during an Estimates hearing on Thursday, PWC officials said the government-owned company was considering legal action against ENI.

“We have been made aware by ENI that they have been facing some gas supply challenges over the course of the 2021-22 financial year – obviously they continue to keep us informed,” PWC’s chief executive Djuna Pollard said.

The Blacktip gas project located 110km off the coast of Darwin in the Timor Sea’s Bonaparte Basin, owned by Italian multinational oil and gas company ENI. Picture: Supplied

“We have a contract with them, so there’s expectations around that.

“Currently they’re not meeting their obligation.”

PWC was forced to use “alternative arrangements” to buy gas but management said it was expecting supply to normalise by the end of 2022.

When asked whether ENI was in breach of its contact, another PWC executive said he couldn’t reveal too much because it was “a legal matter”.

“It’s a legal matter which is currently progressing, so we’re unable to comment on that,” the executive went on to say.

Ms Pollard said the shortfall had hit Power and Water’s profits because the company was unable to sell as much of its excess gas to the East Coast.

Power and Water Corporation operates most of the power stations in the Northern Territory.

PWC typically sells any surplus gas via spot sales.

Last year, the company struggled to sell gas because of a lack of demand but soaring gas prices through 2022 would’ve made this a lucrative market for PWC.

The NT News has attempted to reach ENI’s Australian office for comment.

Earlier in Estimates, it was revealed the government’s push towards a 50 per cent renewable energy target by 2030 would cost $850m over the next five years.

And gas-fired power stations would still need to produce electricity even if solar generation was able to cover the Darwin-Katherine grid’s power demand, to maintain “grid stability”.

Ms Pollard told Estimates on Thursday that the company’s costs were going up, primarily because of the cost of debt and inflation.

But Ms Pollard said regulated power prices meant it was up to the NT government to make any decision around increasing bills for households and businesses.

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Originally published as Gas supplier ENI ‘not meeting obligations’, PWC considering legal action