AGL inks K1.2bil gas deal with OSL


AUSTRALIA’S biggest energy retailer, Australian Gas Light Co has signed a deal with Oil Search Ltd to buy a 10% stake in the Papua New Guinea gas project for about US$400 million (K1.2 billion).
The agreement covers interests in gas and oil reserves, production and processing infrastructure.
AGL also converted its stake in the A$4.5 billion (K14.5 billion) gas project into a binding contract, the Sydney-based company said yesterday in a statement to the Australian Stock Exchange.
The 10% equity agreement took effect last Jan 1 and replaced the conditional agreement announced last July 5, for the sale of around 1,500 petajoules of gas over 20 years from the PNG gas project start-up.
AGL managing director Greg Martin said: “The early finalisation of the equity agreement will deliver a number of benefits to AGL and its shareholders, including an immediate positive impact on AGL’s earnings per share (EPS).
“It also reflects the company’s confidence in the ability of the PNG Gas Project, and the associated PNG-to-Queensland natural gas pipeline, to provide an alternative source of competitively price energy to support economic development in Eastern Australia.
“AGL believes the project participants will benefit from our direct input into key project decisions, which also delivers AGL a more immediate ability to plan for the wider AGL downstream business.
Oil Search Ltd managing director Peter Botten said early completion of the transaction highlighted AGL’s commitment to the PNG gas project.
“It is a significant vote of confidence in the project and a major step in assuring this project reaches sanction.
“It will provide further momentum to close the other gas sales agreements, with new and existing customers, as project certainty increases,” said Mr Botten.
“We believe that AGL can add significant value, particularly to our gas marketing efforts, given its long involvement and strong expertise in the development of Australian gas markets.
The PNG Gas project participants are ExxonMobil (39.4%) – Esso Highlands Ltd as project operator), Oil Search (54.2%), MRDC (3% - a PNG company representing landowner interests) and Nippon Oil Exploration Ltd (3.4%).