Reduction in gas trans. tariffs to customers of the Goldfields Gas Pipeline welcomed

16/2/99

Resources Development and Energy Minister Colin Barnett today welcomed a 25 per cent reduction in gas transmission tariffs to customers of the Goldfields Gas Pipeline.

This follows a review of tariffs and discussions between the State Government and owners of the 1380km pipeline, the Goldfields Gas Transmission Joint Venture (Southern Cross Pipelines Australia and Duke Energy WA Pty Ltd).

The reduction in gas transportation tariffs will apply to both new and existing customers and sets in place the discount of 15 per cent announced in February last year.

The Minister said that under the terms of the Goldfields Gas Pipeline Agreement (1994), tariffs on the pipeline were required to be fair and reasonable and consistent with the approved tariff setting principles outlined in the agreement. The State Government had initiated an independent review of the tariff schedule, which showed that the benchmark tariff required reduction.

"The State Government held discussions with the joint venturers about the tariffs and it has been agreed that tariffs will be reduced by 25 per cent," Mr Barnett said.

"The decrease will be in two stages with the first reduction of 20 per cent taking place on July 1 of this year. The joint venturers have agreed to make a further reduction of five per cent on January 1, 2000."

The Minister said that when fully implemented, the reduction would result in tariffs falling to around $2.75 per gigajoule (GJ) for a large-scale customer in Kalgoorlie, a reduction of $0.904/GJ off the benchmark tariff.

The reduction would be welcome news to the pipeline's existing and potential third party customers, in the Pilbara and the Goldfields.

There are now six significant third party customers contracted to the pipeline. These are Plutonic Resources NL, Great Central Mines at Jundee, Wiluna Mines, Murrin Murrin Operations, Centaur for the Cawse Nickel Project and AlintaGas. These are in addition to the original foundation customers, WMC Limited, Normandy and BHP Limited.

"Reduced energy costs as a result of the gas pipeline have encouraged developers to establish projects with value-added downstream processing capacity, including the nickel laterite projects at Murrin Murrin and Cawse now being commissioned," Mr Barnett said.

The Minister said the pipeline made the reticulation of natural gas to homes in Kalgoorlie possible and allowed electricity from Kalgoorlie to be transported economically over the Western Power grid to Perth Airport.

"It is these types of substantial benefits the Government had in mind when it first encouraged the development of the pipeline," he said.

"Initially constructed by mining companies, the pipeline has reached a more mature stage of its development where it is now owned and operated by dedicated energy corporations.

"The new owners are to be congratulated on the co-operative and far-sighted approach they are taking to the running and marketing of the pipeline."

Media contact: Jody Robb 9222 9211