Origin, Engie Sign Deals to Cover Australia Power Needs
Australian producer and marketer Origin Energy has signed two agreements March 29 to boost natural gas supplies to French utility Engie.
The first is to underpin the operation of Pelican Point power station’s second generation unit. The second is a pure gas sales agreement to make more natural gas available for Engie's customers in South Australia and Victoria.
Under the Pelican Point agreement, Origin will supply gas to Engie-run Pelican Point in South Australia and for a fixed charge will gain access to 240 MW of electricity production, to be used by Origin to supply customers in South Australia. Origin said the arrangement would run from July 2017 to June 2020 inclusive and would better position the plant to support peak demand during the 2017 and 2018 summer periods and beyond. Engie also said March 29 that it would spend over A$40mn upgrading a second turbine at Pelican Point that had been withdrawn from the market since April 2015. The 479 MW plant is 72%-owned by Engie and 28% by Japan's Mitsui.
Under the separate gas sales agreement, Origin will sell 8 petajoules (213.6mn m3) of gas to Engie in Australia spanning the 2018 and 2019 calendar years to help it meet the needs of the latter's customers.
Pelican Point power plant (Photo credit: Engie)
Origin CEO, Frank Calabria said, “The power outages in South Australia reinforce the need for sufficient gas-fired power generation to be readily available, especially when wind and solar energy is not available. These agreements are examples of immediate steps industry is taking to safeguard electricity supply and make sure more natural gas will be available to meet the needs of customers.”
Australian east coast is facing severe gas shortage domestically, while LNG exports are growing.
Engie also announced the closure this week of the final units of its 1,542 MW lignite-fired power plant and lignite mine at Hazelwood, 150km east of Melbourne, after 53 years of the plant's operation. At its peak, the plant provided 25% of Victoria's power needs and 5% of Australia's, Engie said. The closure is consistent with the French utility's withdrawal from coal and lignite operations worldwide. Mitsui also had a 28% stake in the assets.
Australian Energy Market Operator (AEMO) warned that a shortage of gas could result in a shortfall of available gas-powered electricity generation impacting New South Wales, Victoria and South Australia from the summer of 2018-19. Following the warning, Australia's prime minister Malcolm Turnbull and gas producers agreed a package of measures aimed at improving and safeguarding supplies of gas to the three states' power generators.
Shardul Sharma