HomeNewsSenex, AGL Sign Major Australian Gas Supply Deal

Senex, AGL Sign Major Australian Gas Supply Deal

6/16/2023

SYDNEY, June 16 (Reuters) - Australian gas producer Senex Energy, owned by South Korean steel giant Posco, has entered into an agreement to supply 42 petajoules (PJ) of gas to the country's top power producer AGL Energy, the companies said on Friday.

The deal comes amid warnings this year from Australia's energy market operator of long-term supply gaps for gas on the country's east coast, and after gas producers said they were reluctant to invest in new supply following government interventions.

"This agreement will add critical new supply to the domestic market when it's needed most," Senex Energy Chief Executive Ian Davies said in a statement.

The gas deal, expected to begin in January 2025, is conditional on the restart of a A$1 billion ($687 million) expansion at Senex Energy's Atlas project in Queensland state's Surat Basin, Davies said. The value of the deal was not specified.

The expansion was suspended in December after the Australian government set a price cap on new wholesale gas sales by east coast producers in a bid to reduce power bills for households and businesses hit by soaring costs.

But the move was met with fierce opposition from the industry, which said the reforms dealt a blow to the gas supply and the country's future energy security, and will lead to market chaos.

Senex in August last year announced the expansion plans at Atlas to raise its output to 60 PJ a year by 2025, before shelving it after the government's decision on price caps.

The resumption of the expansion work at Atlas requires approvals from the federal agreement and regulators.

($1 = 1.4550 Australian dollars)

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