Armour signs gas supply deal with Shell Australia
Sydney-listed Armour Energy has signed a master sales agreement (MSA) with Shell Energy Australia, a wholly-owned subsidiary of Shell, and has entered into an initial 13-month gas sales agreement pursuant to the MSA, it said on March 20.
The MSA provides the framework and general terms and conditions for any bilateral gas trading that is agreed upon for supply from Armour’s conventional fields in the Surat basin, Queensland. The gas sales agreement will come into effect from December 1, 2023.
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The gas prices agreed are materially higher than that of Armour’s current contract arrangements, the company said. The price for December 2023 is A$12/GJ, with an uplift in price for 2024 based on forecast market pricing improvements.
Additionally, the parties are exploring initial opportunities, on a non-exclusive basis, for Shell to utilise the 100% Armour-owned and operated Newstead gas storage facility that has a licenced storage capacity of up to 7.9 PJ.
“This new gas sales agreement with Shell represents a significant improvement in value for Armour, providing certainty to develop and expand our conventional gas reserves,” Christian Lange, CEO of Armour, said. “The potential to utilise the Newstead gas storage facility represents a significant opportunity for Armour, supporting a funnel of transactions which will further underpin development.”
Armour said it is currently undertaking an extensive field optimisation and enhancement programme where the initial focus will be across its substantial Surat basin portfolio. This includes wells, reservoir and production facilities focusing on data management, network de-bottlenecking, production enhancement, seismic reprocessing and acquisition, reservoir management, well intervention and drilling.