After negotiating a $1 billion, 20-year gas transport deal with electricity utility, Western Power, a consortium consisting of newly listed Diversified Utility and Energy Trusts (DUET), Alcoa and Alinta Gas has paid $1.86 billion for the pipeline system.

The 1600km pipeline system had been owned by Epic Energy, which was placed in receivership in April when it could not pay loans from its banking syndicate.

The State Government has given the consortium $88 million in the form of a long-term interest-free loan towards the expansion of the pipeline, said Alinta manager investor relations Sean Duffy.

“The pipeline expansion will involve a combination of compression and looping,” Duffy told EnergyReview.Net.

“The goal is to increase capacity from 520TJ a day to 620TJ over the next four years.”

The pipeline consortium has agreed to ‘use its best endeavours’ to meet Western Power’s needs for the summer of 2005/6, but Duffy would not disclose what this meant in terms of extra terajoules.

A key condition of the new deal with DUET, Alinta and Alcoa was that gas customers or shippers – including Western Power – agreed to pay a higher tariff than the minimum set by the regulator.

The lower regulated tariff had been blamed in part for Epic Energy being forced into receivership in April.