APA Group has signed a heads of agreement (HoA) with Cooper Energy for the development of Gippsland Basin gas projects – bringing new gas supply sources to south east Australia.
Under the agreement, APA is set to acquire, operate and upgrade of the Orbost gas processing plant in Victoria, while Cooper Energy will develop the offshore Sole gas field.
The agreement helps streamline the Sole gas project; separating funding, development and operating responsibilities for the gas processing infrastructure and upstream elements.
The Orbost processing plant will also become a hub for other new gas projects including the Manta gas field.
APA will fund all capital – approximately $250 million – related to the plant’s expansion and upgrade, processing natural gas from the Sole Gas project.
Cooper Energy will fund all capital – around $355 million – associated with the Sole gas project, including the subsea infrastructure, all drilling activities, offshore pipeline and associated shore crossing.
The companies will also enter another agreement for the processing and delivery of gas by APA to the market.
APA managing director Mick McCormack said the company had been looking 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,” he said.
“We believe that the Sole gas project has the potential to be a source of significant new gas supply to the Eastern Australian market.”
Cooper Energy managing director 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.
“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.”
Late last year, Santos sold all of its Victorian gas assets to Cooper Energy for $82 million, exiting from offshore Victoria.