Orica's gas deal could ignite a price surge

Orica's agreement with BHP and Esso secures its gas supply and suggests that more gas can be commercialised at oil-linked prices. However, consumers in eastern states could be in for a price shock.

Ian Smith isn’t relying on governments or a breakthrough in the impasse over exploitation of NSW’s coal seam gas reserves to secure Orica’s gas supplies. Today he added a conventional arrangement with Esso and BHP Billiton to an earlier and rather less conventional deal to get access to gas.

The three-year agreement with Esso and BHP enables Orica to acquire up to 42 petajoules of gas over three years, beginning in 2017, from the Bass Strait partners. There is provision for the agreements to be extended into the next decade.

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