Strike notches gas sale deals with South32, AGL

Strike Energy has notched gas sale agreements with Boddington miner South32 and AGL from its South Erregulla development in the Perth Basin, dependent on a final investment decision. 

The ASX-listed gas producer told the market it had secured the two deals to underpin the bankability of its proposed South Erregulla 40 terajoules per day phase one development, with a final investment decision anticipated for early 2024. 

The two gas sale agreements with South32 and AGL Energy cover about 42 petajoules of gas, about 60 per cent of the estimated daily production capacity of the development.

Stike said that was in line with its strategy to retain a portion of the production for short term market once nearing start-up.

It comes after the Environmental Protection Authority cleared the way for Strike to progress its South Erregulla gas field development after determining not to assess the proposal.

South32 subsidiary Worsley Alumina joint venture will buy a total of 36.5 PJ of gas, at 20 TJ per day, on a firm take or pay basis over a five-year term.

The deal is expected to assist the miner to reduce its operational emissions of greenhouse gas as it transitions its boiler fuel source from coal to gas.

South32 owns the majority stake in Worsley Alumina, with 10 per cent held by Japan Alumina Associates and 4 per cent in the hands of Sojitz Alumina.

The parties mine bauxite from the mine near Boddington south of Perth, that’s then transported to the alumina refinery near Collie and turned into alumina powder.

Strike also struck a medium-term gas sale agreement with a subsidiary of AGL Energy dubbed Perth Energy, which replaced a long-term deal for 14.6 PJ of gas over five-years hatched in April last year.

The new deal provides for a total of 5.75 PJ of gas, at 5 TJ per day, on a firm take or pay basis for a period of three-years from the South Erregulla development.

Strike said the gas supply is proposed to be generated from phase one of the South Erregulla gas field, and hinge on the gas producer making a final investment decision on phase one.

“The agreements with the Worsley Alumina joint venture and Perth Energy provide a commercially attractive route for Strike to sell its South Erregulla gas stream in a strong pricing environment that supports the bankability of the project,” managing director Stuart Nicholls said.

“The sale of this gas into the state’s electricity and mineral refining markets continues to demonstrate Strike’s commitment to supporting the energy transition of Western Australia from coal through the provision of domestic gas from the Perth Basin.”

Strike’s shares were trading down 0.66 per cent to 37.7 cents per share.