Central pens gas supply deal with Aussie miner

Australia-listed Central Petroleum has inked an agreement with mining company Arafura, paving the way for the supply of up to 6.85 petajoules of gas over five years commencing in 2026, it said on February 12.

The deal encompasses firm gas supply ex-field, featuring take-or-pay provisions and a fixed price structure that escalates in line with the consumer price index.

The gas supplied will be aggregated with existing Mereenie gas supply from Macquarie Mereenie, NZOG, and Cue to deliver up to 27.4 petajoules of gas to Arafura from 2026. The ex-field pricing under the agreement reflects strong market conditions, Central said.

Arafura, engaged in the development of the Nolans rare earth project located 135 km north of Alice Springs in the Northern Territory, is targeting untapped neodymium and praseodymium resources. 

As per the terms of the deal, Arafura must fulfill several conditions precedent by June this year. These conditions include securing project approvals and a final investment decision, concluding power and transport agreements, and finalizing debt financing.

Central said it expects to bring more gas to market, having increased its production capacity through the commissioning of the Palm Valley 12 well in November 2022 and recent well recompletions at Mereenie.