APA, Origin extend gas deal

APA Group (APA) and Origin Energy (ORG) have inked a new transportation and storage services agreement under which APA will assist Origin to increase gas transport from Victoria to New South Wales.

In a statement to the Australian Securities Exchange, APA said the new agreement was for six years and will commence at the expiry of the current contract in December.

"Under this agreement APA will supply a revised suite of services on the Moomba Sydney Pipeline including increased gas transportation from Victorian gas sources and some reduction in services from Moomba," APA said.

"To enable the increased gas flow into New South Wales from Victoria, APA will increase the capacity of the northern zone of the Victorian Transmission System by 59% by looping sections of the Wollert to Barnawartha pipeline, at a cost of approximately $65 million."

The group said capital works would commence this year with an expected completion date of winter 2015.

The expansion is underwritten by this new agreement and additional regulated revenues on the Victorian Transmission System.

APA managing director Mick McCormack said the group continues to adapt its gas pipeline infrastructure to serve the needs of its customers.

"APA has a longstanding commitment to work with our customers to identify, and invest in the development of, gas infrastructure required to support their business," he said.

“The planned capacity increase in the northern zone of the Victorian Transmission System is an incremental development of APA’s east coast gas grid and will further enhance our ability to offer a flexible range of services.

"The Moomba Sydney Pipeline is an integral component of the east coast gas grid.”