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Australia’s Northern Territory Chooses Jemena To Build Gas Pipeline

Australia’s Northern Territory on Nov. 17 chose Jemena, a company owned by State Grid Corp of China and Singapore Power, to build a pipeline that could unlock major new gas supplies for the country’s east.

Jemena’s proposed A$800 million ($567 million) project beat rival bids from APA Group, DUET Group, and a Chinese consortium PCP Australia, which included state-owned China National Petroleum Corp.

“Without this pipeline, the populated parts of Australia would have huge difficulty securing their energy needs,” Northern Territory Chief Minister Adam Giles said in a statement.

The 622 kms (386 mile) pipeline, which Jemena expects to complete in 2018, will run between Tennant Creek in the Northern Territory and Mount Isa in Queensland, a shorter and cheaper route than proposed by two of the other bidders.

The alternative, running south to the gas hub of Moomba, would have provided more connections to southeastern markets for the Northern Territory’s 230 trillion cubic feet of onshore and offshore gas resources, but the northern route was more affordable and quicker to build.

“Going south just wouldn’t have provided the same catalyst to fast track development of the NT’s gas fields,” Jemena Managing Director Paul Adams said in a statement.

The pipeline was cheered by manufacturers, who have long complained that Australia’s major gas producers were going to drain the market of gas for their liquefied natural gas (LNG) export projects and have raised concern about a lack of competition among domestic gas suppliers.

“The NEGI (North East Gas Interconnector) will…increase gas supply to the east coast market where energy-intensive manufacturers are desperate for competitive supply options,” Incitec Pivot Ltd Chief Executive James Fazzino said in an emailed statement.

Fertiliser and explosives maker Incitec, the biggest industrial gas consumer on the east coast, has already signed up as a customer for the pipeline, committing to buy gas from NT’s Power and Water Corp for 10 years for a fertiliser plant in Queensland.

It also has a tentative agreement to buy gas from Central Petroleum, which expects to provide more than half of the pipeline’s initial throughput.

“The creation of a new market for onshore gas discovered in the Northern Territory is truly transformational for the Territory and Central Petroleum,” Managing Director Richard Cottee said in a statement.

($1 = 1.4118 Australian dollars)

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