Gas retailer AGL Energy Ltd., Sydney, says it will exit the oil business and massively scaling back its upstream gas operations.
AGL intends to produce just 20% of its downstream gas requirements in the next 10 years, well below its previous target of 50%.
A number of poorly performing assets have been deemed noncore and will be sold or relinquished. The focus will be on fewer gas projects and avoiding the high capital expenditure that goes with exploration.
Core projects to be retained are the Camden coal seam gas development, the Gloucester gas project, and the recently opened Newcastle gas storage facility, all in New South Wales. The company will also retain its Silver Springs underground storage facility and the Wallumbilla LPG plant in Queensland.
AGL believes it can cover the expected demand for domestic gas supplies until 2007 and contracted commercial and industrial demand until 2021. The supply can be augmented by ongoing portfolio management tailored to customer requirements. The company’s future will be firmly rooted in its downstream interests.
AGL says the Camden North expansion and the Hunter gas projects will not go ahead and the surrounding permits will be sold back to the New South Wales government for a figure believed to be about $600,000 (Aus.). The company also will sell its share of two Queensland gas fields: Springvale and Moranbah.
The Cooper oil project in Queensland permit ATP 1956P will also be sold. The block covers 3,800 sq km and straddles a significant part of the prospective southeast Cooper basin margin oil fairway close to existing fields.
Total write-downs for the financial year just ended will be about $808 million (Aus.).