AGL signs ten year contract to supply gas.
AGL Energy Limited ("AGL") and APA Group ("APA") today announced the signing of a long term Energy Supply Agreement with Xstrata Mount Isa Mines (Xstrata) and a Power Purchase Agreement with Ergon Energy Queensland (Ergon), a Queensland Government Owned Corporation, underpinning the joint development of a 242 MW gas-fired power station in Mt Isa Queensland.
AGL will supply the new Diamantina Power Station (DPS) with 138 PJ of gas from its wholesale portfolio for the first 10 ½ years of the project, after which Xstrata and Ergon are able to commence a tolling arrangement with DPS. AGL's gas supply arrangements to DPS will initially involve the supply of interim gas for Xstrata from May 2013, coinciding with the expiry of Xstrata's current gas supply contracts. The supply arrangements will utilise AGL's existing gas transportation arrangements and recently commissioned Silver Springs Gas Storage facility. In addition APA will supply gas transportation services to DPS along the Carpentaria Gas Pipeline.
AGL's Managing Director Michael Fraser said "This is a significant development project for AGL which will provide energy supply security for the Mt Isa region well into the next decade. I am delighted that the AGL and APA proposal was selected by two key Mt Isa customers to deliver a low carbon emission energy supply solution for the region".
The DPS will be an air-chilled high-efficiency, combined cycle gas turbine suitable for remote area heavy duty operations, and is expected to become fully operational in March 2014, with the first 121 MW unit operational in December 2013.
AGL and APA have selected CTEC as the EPC contractor for this project with the fixed price turnkey contract supported by a sub-contract with Siemens, who will provide the majority of the power station equipment.
Financial Impact to AGL
The total capital expenditure for the DPS power station development is expected to be approximately $500 million (before project financing costs), which is expected to be funded by implementing a limited-recourse project financing facility and by equity contributions by AGL and APA. AGL will fund its equity contribution, which is expected to be about $100 million, from cash reserves.
AGL's investment in DPS and the supporting gas sales agreement will be earnings accretive from FY2013.
Transaction Highlights
About AGL
AGL is one of Australia's leading integrated renewable energy companies and is taking action toward creating a sustainable energy future for our investors, communities and customers. Drawing on over 170 years of experience, AGL operates retail and merchant energy businesses, power generation assets and an upstream gas portfolio. AGL has one of Australia's largest retail energy and dual fuel customer bases. AGL has a diverse power generation portfolio including base, peaking and intermediate generation plants, spread across traditional thermal generation as well as renewable sources including hydro, wind, landfill gas and biomass. AGL is Australia's largest private owner and operator of renewable energy assets and is looking to further expand this position by exploring a suite of low emission and renewable energy generation development opportunities.
MediaMedia Relations
+61 402 919 507
media@agl.com.au
Investor Relations
James Thompson
Head of Investor Relations
+61 403 183 563
JThompson5@agl.com.au