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Posted: 2017-11-12 01:32:51

Updated November 12, 2017 15:13:53

One of Tasmania's biggest employers wants the State Government to invest hundreds of millions of dollars to buy a key piece of energy infrastructure — the undersea gas pipeline.

It is the only pipeline supplying natural gas to Tasmania, travelling under Bass Strait from Longford in Victoria.

Against the backdrop of stalled negotiations for a new gas deal, Grange Resources' Ben Maynard believes the pipeline would be better in public, not private hands.

"Strategically I think it is an asset that Tasmania could benefit from," he said.

"The way it's situated at the moment I'm not sure it's giving us the best value."

The state-owned power generator, Hydro Tasmania, has been locked in talks with the owners of the pipeline for months.

Hydro has a "take or pay" agreement with the Tasmanian Gas Pipeline (TGP) that expires at the end of the year.

Despite the Government's own energy security taskforce recommending a deal be struck in the first quarter of this year, there is still no resolution.

Grange may be forced to scale back production: Forrest

Mr Maynard, whose iron ore company employs 600 people in the state, said it was making business difficult.

"Because we do need to lock into long-term contract for our gas and with that uncertainty we don't know what the price will be going forward, and that's made it difficult for us to make a commitment," he said.

"Our backs are up against the wall with it really."

The company uses gas to dry the iron ore pellets produced at its facility in Port Latta and it also operates a mine at Savage River on the west coast.

Independent Upper House MLC Ruth Forrest is concerned the situation could force Grange to scale back its production.

"They could stop doing that and not use the gas, which I certainly hope it doesn't come to because if that did happen, we would lose that value add, we'd lose a lot of employment," she said.

"It would also mean that the cost of gas to every other user in the state would significantly increase."

Arbitration looming as deadline approaches

The Tasmanian Gas Pipeline has said is was not interested in selling the asset and negotiations for a new gas deal were continuing.

"But if a solution is not found soon, an expensive and time consuming arbitration process may be put in place," a spokesman said.

The arbitration mechanism has been available since September but has not been used.

The Energy Minister, Guy Barnett, said he was "confident future arrangement will be in place well prior to the expiry of the contracts".

"However arbitration is an option if a resolution is not forthcoming," he said.

Hydro Tasmania said certainty was important for big gas users.

"Hydro Tasmania has extended gas transportation arrangements for three major gas users until the end of the year, under the existing contract," a spokeswoman said.

Topics: mining-industry, industry, energy, smithton-7330

First posted November 12, 2017 12:32:51

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