The power station will be located approximately 40km west of Dalby in southern Queensland, Australia, adjacent to the Braemer 1 power station which was managed by ERM Power from conception through to successful construction, operation and trading. The power station is in close proximity to Arrow’s Daandine and Stratheden gas fields.
The project is scheduled for financial close in the first half of 2008 and the debt financing being arranged by ERM for the project is well advanced with selected lenders. The partnership agreement contains conditions precedent which requires ERM to achieve the majority of the remaining components and documentation necessary for project financial close. Arrow will fund its share of the investment from existing cash resources and debt facilities currently being arranged.
As an integral part of this transaction Arrow has signed a gas sales agreement with the Braemar 2 Partnership to supply 11.5 peta joules (PJ) of gas per annum over a 12-year period using a pricing formula that will look through to the underlying electricity revenues. This gas will be supplied from a combined development of the 100% Arrow owned Daandine and Stratheden fields which are close to the proposed power plant. The initial development of the Stratheden field has already been approved by the Arrow board and development work is expected to start immediately.
