AGL builds upstream presence with CSM acquisitions

THE Australian Gas Light Company is now truly an integrated energy company, increasing its presence in the Queensland energy market with the acquisition of BHP Billiton’s 50% share in Australia’s largest single producing coal seam methane development, the Moranbah Gas Project, for $US68.7 million (about $A93 million).
AGL builds upstream presence with CSM acquisitions AGL builds upstream presence with CSM acquisitions AGL builds upstream presence with CSM acquisitions AGL builds upstream presence with CSM acquisitions AGL builds upstream presence with CSM acquisitions

AGL managing director Paul Anthony said this was a strategic acquisition for AGL in providing a strong presence in one of Australia’s fastest-growing energy markets.

“The Moranbah Gas Project will complement AGL’s existing interest in the proposed Papua New Guinea Gas Project and associated PNG-to-Queensland gas pipeline, as well as the proposed Townsville Power Station,” he said.

“This project firmly positions AGL to capitalise on the significant growth opportunities offered by the Queensland market, particularly in the Townsville-Gladstone corridor.”

The Moranbah Gas Project is forecast to produce about 16 petajoules in the 2006 contract year, about 12% of the Queensland gas market. Financial close on the transaction is expected by July/August.

Anthony said the acquisition of the gas project was consistent with AGL’s strategy of diversifying its wholesale gas portfolio, which now includes gas sourced from Moomba in South Australia, the Gippsland Basin in Victoria, other CSM sources in Queensland, the Sydney Basin as well as proposed gas from PNG.

“A diversified wholesale gas portfolio is a key element of AGL’s integrated energy company strategy and enables AGL to continue to supply competitively priced energy to customers in eastern Australia,” he said.

“In addition, it underpins AGL’s entry into the Queensland market, particularly when retail gas and electricity markets become contestable post-2007.”

The investment is estimated to reduce earnings per share by less than 1c per share (pre-AGL/Alinta merger) in the year to June 30, 2007. AGL said it expected the EPS impact to improve annually and become accretive during the fifth year of AGL ownership.

The Queensland Government’s Special Fiscal and Economic Statement has forecast electricity consumption in Queensland to grow by 8.8% per annum over the next two years.

AGL’s proposed 370MW gas-fired Townsville Power Station is expected to contribute to satisfying this projected growth in northern Queensland, consistent with Government initiatives to enhance opportunities to attract major industry development to the area. Additionally, the central north Queensland region is slated for significant future industrial developments such as new metals-processing industries.

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