APA Group, Australia’s largest listed gas infrastructure operator, will invest $75 million to expand its pipeline capacity as the country’s east coast faces a projected gas shortfall.
The investment is part of APA’s strategy to bolster supply amid industry concerns that delays in approving new domestic gas projects could force New South Wales and Victoria to import liquefied natural gas (LNG), potentially leading to higher prices.
Expansion of east coast gas grid
APA will allocate $40 million to expand the east coast gas grid (ECGG), including a $25 million upgrade to the Moomba to Sydney Ethane Pipeline (MSEP).
This project aims to add approximately 20 terajoules per day (TJ/day) of additional capacity from Moomba to Victoria or 25 TJ/day to Sydney. Once converted to natural gas, the incremental MSEP capacity will increase southbound supply from Moomba to Sydney from 565 TJ/day to 590 TJ/day.
A further $15 million will be spent on two pressure regulation skids to enhance capacity during summer when maintenance activities typically constrain supply. The infrastructure upgrades are expected to improve gas flow during the 2024 and 2026 summer periods.
Pipeline planning and storage options
In a second tranche of investment, APA will commit $35 million to early-stage planning for potential new pipelines. These would connect gas reserves in the Beetaloo Sub-basin in the Northern Territory and Queensland’s Surat Basin to the east coast market.
The company is also considering the development of an additional gas storage pipeline, which could help manage seasonal demand fluctuations and improve overall system reliability.
Strategic importance of investment
APA chief executive officer Adam Watson described the projects as critical for Australia’s energy security and economic stability.
“These are critical projects in the national interest to help secure Australia’s energy future and support a more affordable and lower-emissions energy system,” Watson said.
“Australia will need gas out to 2050 and beyond as a critical backup to renewables and to support many of Australia’s key manufacturing and industrial sectors.”
Watson added that APA’s investment could help the country avoid reliance on imported LNG, which he said would come at a higher cost and with greater emissions, exposing Australia’s energy market to global supply chain risks.
Financial performance and market reaction
APA’s expansion plans were announced alongside its latest financial results, which showed a 54% decline in half-year profits despite an increase in revenue.
For the six months ending December 31, APA reported underlying profits of $34 million, down from $74 million a year earlier, driven by higher interest costs. The result fell below market expectations.
However, revenue rose nearly 7% to $1.621 billion, surpassing forecasts and improving on the previous year’s $1.516 billion. APA reaffirmed its earnings guidance and declared a 27-cent per share dividend, in line with market projections.
While the investment strengthens APA’s position in Australia’s energy transition, the projects remain subject to the company’s final approval.