Orica signs major natural gas agreement

Orica has signed a major natural gas agreement with Esso Australia and BHP Billiton. The three-year gas sales agreement (GSA) will see Orica purchase up to 14 petajoules (PJ) of natural gas per year - up to a total of 42 PJ - from Longford in Victoria, commencing in 2017.

The ESSO/BHPB joint venture will supply gas for the first time to Orica. These arrangements will meet Orica’s total gas requirement for its Kooragang Island manufacturing facility in NSW.

This agreement forms part of Orica’s forward-looking Australian east-coast gas supply strategy. The natural gas supply will come from the Gippsland basin via the Longford processing plant and be delivered downstream to NSW. The GSA, which incorporates an oil linked component, provides competitive pricing. The agreement recognises the arrangements could be extended past the end of 2019.

“This important agreement with ESSO/BHP Billtion gives Orica security of gas supply to the end of the decade for our Kooragang Island manufacturing facility from a highly reliable supplier,” said Orica Managing Director and CEO Ian Smith.

Discussions are also currently underway with a number of parties regarding the supply of 3.5 PJ per annum to Orica’s Yarwun facility in Queensland. As announced in July 2013, additional optionality will also be provided by executing the binding term sheet with Strike Energy Limited to evaluate and commercialise a large prospective gas resource from the Southern Cooper Basin gas project in South Australia.