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  • Gas operator APA Group (APA) has partnered with Origin Energy (ORG) and inked a deal to expand its east coast gas grid
  • The ASX-50 lister will look to boost its gas transportation pipeline from Queensland to states like Victoria, South Australia and New South Wales by 25 per cent
  • It comes as Australia’s southern regions brace for a potential gas shortage to hit in the winter of 2023
  • Coinciding with its expansion plan, APA has also inked a gas transportation agreement with Origin Energy
  • Under the deal, forecast to commence in 2023 and generate $190 million in incremental revenue, Origin could meet over half of NSW’s winter gas demand
  • Following the news, the ASX-50 lister closed Wednesday’s session down 0.1 per cent at $10 per share

Gas operator APA Group (APA) has partnered with Origin Energy (ORG) and inked a deal to expand its east coast grid in a bid to overcome impending gas shortages in Australia’s southern markets.

The ASX-50 lister will look to boost its gas transportation pipeline from Queensland to states like Victoria, South Australia and New South Wales by 25 per cent after reaching a final investment decision today.

It comes as Australia’s southern regions brace for a potential gas shortage to hit in the winter of 2023.

Earlier this year, the Australian Energy Market Operator (AEMO) released a report which warned the pending end of production across several existing gas fields could bring about shortages two years from now.

“Supply from existing and committed southern gas developments is expected to reduce by more than 35 per cent over the next five years, despite the increase in newly committed gas projects over the last 12 months,” commented AEMO Managing Director and CEO Audrey Zibelman.

The news has triggered a battle to stave off supply constraints among domestic operators. In April, fellow ASX- lister AGL Energy’s (AGL) proposal for an LNG import jetty at Crib Point was blocked by the Victorian Government.

Now that its own strategy has received the green light, APA’s plan to take northern gas south will play out in two parts. First, the operator will add 12 per cent capacity from Wallumbilla in Queensland to Wilton in NSW and target commissioning in 2023’s first quarter.

Then, towards year’s end, APA will add a further 13 per cent capacity to meet rising consumer demand. All up, the plan requires a $270 million investment.

Coinciding with its expansion plan, APA has also inked a gas transportation agreement with Origin Energy. Under the deal, set to commence on New Year’s Day in 2023, Origin could meet over half of NSW’s winter gas demand.

Running for an initial three-year term, the contract is poised to generate $190 million in incremental revenue. The deal includes an option for a two-year extension.

Following the news, the ASX-50 lister closed Wednesday’s session down 0.1 per cent at $10 per share. The operator commands an $11.8 billion market capitalisation.

APA by the numbers
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