APA pauses pipeline expansion amid regulatory clampdown: The Australian
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The news: APA Queensland has delayed signing-off on its South West Queensland Pipeline expansion which was due to start construction in H2 2024, stating that regulatory uncertainty tied to the government’s investigation into the pipeline sector means it cannot approve the spending.
The numbers: APA’s plans included expanding the capacity of the pipeline by 25% through stage three and four processes, The Australian reports, which would direct more gas toward NSW and Victoria.
The context: Speaking at the Macquarie Australia Conference late last week, APA CEO Adam Watson explained that the company has paused investment in stage three of the east coast grid, which links Wallumbilla in southeast Queensland to Moomba in South Australia, which had been viewed as a critical update to avoid impending gas shortfalls in Australia’s southern states in the next two years.
APA is delaying sign off on stage three and four as the Australian Energy Regulator (AER) is now weighing plans to convert the expansion to a “scheme pipeline” which would subject the project to full price regulation.
Watson said that APA shareholders have bluntly asked: “How do you do that when you don’t know what return we’re going to get now on stage three or stage four? […] Stages one and two increased the capacity of the east coast grid by about 25% – that is seriously material and we know that we can keep building out and expanding the capacity of that grid really efficiently, but the simple (question) is how do we do that when there is uncertainty about the return we are going to get?”
On Thursday the government outlined its plans to support the country’s natural gas industry under the ‘Future Gas Strategy,’ which specifically highlighted the looming challenges of a shortage of gas supply in the southern states in the coming years.
