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AGL signs up for new gas supplies
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Australia's biggest energy retailer, the Australian Gas Light Co. (AGL), is to buy gas worth A$4.5 billion ($2.5 billion) from three separate Australian gas fields under new contracts announced Wednesday. The new deals are a blow to another potential gas supplier, the Papua New Guinea (PNG) to Queensland pipeline project. AGL said it will sign long-term contracts for the supply and transportation of 1,408 petajoules of gas over 15 years from three groups, led by BHP Billiton, Santos and Origin Energy. That is a major blow to the New Guinea project. AGL has advised the pipeline project owners, which include Oil Search, ExxonMobil and ChevronTexaco, that it was "reassessing" its options for PNG gas. AGL became a founding customer in the PNG pipeline project in March 2002 on the expectation that other customers would come forward. But it says the delay in finding other backers means it now has to look elsewhere to meet its Queensland customers' needs for gas from 2006. 'Disappointed'Oil Search, the PNG project operator with a 45 percent stake, said it had been told by AGL that it was unlikely to require PNG gas from 2006. It called the decision "disappointing." AGL managing director Greg Martin said the company has contracted to take up to 563 petajoules from the BHP Billiton/Esso Gippsland Basin producers; 505 petajoules from the Santos-led Cooper Basin producers; and 340 petajoules from Origin Energy's interests in the Surat/Bowen Basins in Queensland. "These new gas supply arrangements represent some of the most significant transactions of this nature in Australia and are fundamental to AGL securing competitively priced gas supplies for its customers well into the next decade,'' Martin said. He said AGL had always wanted to get a diversified supply arrangement. Biggest providerAGL is Australia's biggest energy provider, delivering electricity, natural gas and liquefied petroleum gas to more than 2 million customers in New South Wales, Victoria, Queensland and South Australia. Outside of Australia, it has 66 percent of New Zealand's Natural Gas Corp., 20 percent of the New Zealand regional electricity retailer Trust Power Ltd., and 100 percent of Gas Valpo, the largest regional natural gas distributor in Chile. In August, AGL Chairman John Phillips announced a net profit of A$192.1 million for the year to June 30, up from A$115.4 million in the previous year. Shares in Oil Search bore the brunt of the decision, giving up 25 percent to A$0.60 and topping the volume in Sydney on Wednesday. AGL closed 2.06 percent higher, while the broader market, as measured by the S&P/ASX 200, closed flat at 2,986.05.
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