APA Group and Cooper Energy have signed a non-binding Heads of Agreement to develop the Gippsland Basin gas project as a new source of gas supply to South East Australia.
Under the agreement, both companies have agreed to exclusively negotiate APA’s acquisition, upgrade and management of the strategically located Orbost Gas Processing Plant in conjunction with Cooper Energy’s offshore Sole Gas Field development.
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APA managing director Mick McCormack said: “APA has been seeking opportunities to fund and develop new projects in the midstream infrastructure sector.
“Acquisition and development of the Orbost Gas Processing Plant represents a significant opportunity for APA to expand this aspect of its business.
“Our team has undertaken extensive technical and commercial due diligence on the transaction over the past few months.
“We believe that the Sole Gas Project has the potential to be a source of significant new gas supply to the Eastern Australian market.
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By GlobalData“We look forward to working with Cooper Energy to finalise our arrangements so that they can bring this project to commercialisation through APA owned energy infrastructure.”
The deal will streamline the Sole Gas Project by separating funding, development and operating responsibilities for the gas processing infrastructure and upstream elements. It will also enable the utilisation of the Orbost Gas Processing Plant as a hub for other new gas projects such as the Manta Gas Field.
Cooper Energy managing director David Maxwell said: “We are delighted to join with APA in this Heads of Agreement, which adds further momentum to the Sole Gas Project and its passage to final investment decision.
“APA is Australia’s largest and leading gas infrastructure specialist and brings proven capability in the development and operation of gas industry facilities.
“Cooper Energy will now concentrate its capital and efforts on our areas of expertise in exploration, upstream development and production and gas marketing.
“With this Heads of Agreement in place, we are now able to proceed with the final phase of securing what we need to finance the Sole Gas Project.”
The final agreement will enable APA to acquire the Orbost Gas Processing Plant from Cooper Energy for a consideration equivalent to Cooper Energy’s expenditure on the Orbost Gas Processing Plant in respect of the Sole Gas Project.
APA will also fund the expansion and upgrade of the plant, which will process natural gas from the project.
This investment in expansion and upgrade is expected to be A$250m ($192m).
Cooper Energy will bear all expenditure associated with the offshore development of the Sole Gas Project. The expenditure is anticipated to be $355m ($272.6m).
The Heads of Agreement allows Cooper Energy to work exclusively with APA until April this year to finalise and sign a binding deal to implement the transaction.
