This sale follows the purchase by AGL and Arrow of the Enertrade assets in November 2007, and relates to the on-sale of the gas pipeline asset only. AGL and Arrow will retain ownership of the gas processing and compression facility located at Moranbah, Australia, which will be integrated into the Moranbah Gas Project joint venture.
The North Queensland Energy joint venture gas transportation agreement on the North Queensland Gas Pipeline (NQGP) has been expanded to provide additional gas haulage capacity to accommodate future power generation projects and other gas market growth in north Queensland, as well as scope for further contract extensions.
These extensions would accommodate any future additions agreed under the terms of the power purchase agreement that AGL and Arrow have signed with the Townsville power station in Yabulu, Australia.
Under the terms of the sale, AGL and Arrow will continue to operate the pipeline through a jointly owned company (NQPM), providing contracted operating and maintenance services to Victorian Funds Management Corporation (VFMC). The sale will result in a post-tax profit to AGL of approximately A$17 million. Financial close is scheduled for late July 2008 with proceeds to be applied to reduce AGL’s bank debt.
Michael Fraser, AGL’s managing director, said: This sale is consistent with our intentions outlined at the time we acquired this asset. Ownership of the pipeline is non-core to AGL’s integrated strategy and we have achieved a very pleasing sale outcome, especially in light of current market conditions. We also welcome VFMC as a strategic partner in the infrastructure elements of our north Queensland operations.
