Cooper Energy Ltd., Adelaide, delayed a final investment decision on a new phase of gas development and exploration in the offshore Otway basin off Western Victoria.
The proposed $400 million (Aus.) Otway Phase 3 Development (OP3D) revolves around work in the Casino-Henry operations and the Athena onshore gas plant near Port Campbell.
Cooper said FID timing, originally set for April or May, with first production targeted for 2025, is now subject to finalization of proposed Federal Government changes to gas pricing surrounding a regulated $12 (Aus.) per gigajoule price cap legislated in mid-December 2022 (OGJ Online, Dec. 13, 2022).
A gas sales agreement for OP3D was signed with AGL Energy Ltd. in November to supply AGL with up to 10 petajoules/year of gas for up to 6 years. The agreement includes supplying an initial 8 petajoules/year of the contracted volumes from the new Annie gas field for the first 3 years and then moving into the field’s declining tail.
The government is consulting the industry on the ‘reasonable price’ provision in the mandatory code of conduct that will require gas producers to contract at a reasonable rate.
Although Cooper has signed the agreement with AGL for gas from OP3D, the government’s proposed code allows a customer to challenge the terms with any resulting arbitration settled on the ‘reasonable pricing’ basis.
Cooper decided to await the changes to be sure they are satisfactory in a regulatory and commercial sense so that the company can reconfirm the project economics and ensure alignment with its joint venture partner Mitsui.
Cooper is operator and 50% interest holder in Casino-Henry operations and the Athena plant. Mitsui holds the remaining 50%.