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South-east gas on track after AGL doubles buy contract


Source: Financial Review 18/1/17

South-eastern states look set to secure a new source of gas after AGL Energy almost doubled the volume of gas it will buy from Cooper Energy's $550 million Sole gas project, providing the customer commitments necessary to lock in financing.

AGL, which sells gas to households and business and uses the fuel to produce electricity, will now buy 12 petajoules a year of gas from the proposed project off the coast of Victoria, instead of the originally agreed 6.6 PJ.

The deal brings Cooper up to its target for gas sale contracts for Sole in order to proceed, said managing director David Maxwell. Customer accords have been struck for 20 PJ of the total 25 PJ of potential annual supply from the project.

Cooper is aiming to reach financial close on the project this quarter and is also in talks to bring in equity partners to reduce risk and help with funding. It bought Santos out of the project late last year, taking its ownership to 100 per cent but Mr Maxwell has signalled that Cooper is aiming to eventually hold 65-70 per cent.

Gas from Sole is understood to be selling within the $7-$8 a gigajoule range, more than double historical prices for the fuel but within the range expected for late this decade given the surge in demand due to the new Queensland LNG projects.