CENTRAL Petroleum has entered into expression of interest negotiations (EOI) with gas purchasers, as the first step into a gas sales agreement, Central announced in early-October.
If converted into gas sales agreements, Central said it would result in new firm gas sales of around 12 petajoules (pj) per year for 10 years from the 2018 to 2019 financial year into the Eastern Seaboard domestic gas market.
Included in the gas supply EOIs is the provision for tariffs to be charged by the Northern Territory gas pipeline interconnect (NEGI).
Central said it understands all four short listed builder/owner/operators have submitted final bids, with the government due to announce the successful tenderer by the end of October.
Central is in discussion with each of the bidders including tariffs available to Central show they win the NEGI bid.
This enables Central to finalise potential supply and transportation agreements, and for the pipeline bidders to confirm the gas supply necessary to underpin the NEGI pipeline, the company said.
Central managing director Richard Cottee said negotiations showed all four pipeline bidders to be surprisingly competitive with proposed tariffs at the low-end of the company’s expectations.
“Using the indicative gas pricing of our EOIs and the NEGI pipeline tariffs indicated by the bidders, Central can expect increased revenues ex field well in excess of $500 million over 10 years.”
“These gas sales can be delivered from our existing facilities meaning the revenue should largely fall straight to the bottom line.”
Mr Cottee said Central has already initiated work to ensure it is in a position to execute binding gas sales agreements as soon as possible after the announcement of the preferred NEGI bidder.
Central is seeking all necessary regulatory approvals to commence a workover programme by the middle of October to pressure and flow test targeted gas prone wells, Mr Cottee said.
Total reserves at Mereenie have been increased to 420 PJ, and Mr Cottee said should this target be achieved, Central’s firm gas sales into the NEGI pipeline could substantially increase from the volumes currently being marketed.
“Together with new testing, we expect to be in a position to appoint our reserve certifier by around the middle of this month to efficiently process the new data as soon as it is obtained,” he said.
Mereenie is operated by Central who has a joint venture interest of 50 per cent.
In addition, Central is the operator and owns 100 per cent interest in the Palm Valley and Dingo fields which may also supply into the NEGI pipeline.