Australia: Energy Sector update: August 2013 edition

Last Updated: 22 August 2013
Article by Michael MacGinley and Bruce Adkins


Welcome to the August 2013 edition of the Australian Energy Sector Update, a monthly publication prepared by Corrs Chambers Westgarth for clients who are interested in the Australian energy industry.

This publication brings together a brief summary of information on recently completed deals, market rumours and potential opportunities, and relevant regulatory updates.


On 26 July 2013, the Richard Cottee-led ASX-listed Central Petroleum announced it had placed 100 million shares at A$0.10 per share, with over 80% of the placement being taken by three large domestic institutions. Proceeds from the placement will fund Central Petroleum's Surprise and East-1 assets into production. If the assets perform as expected, Central Petroleum said it will have a cash flow of A$20 million in 2014 to fund its share of a farmout.

On 15 July 2013, ASX-listed AGL Energy Limited announced a recommended takeover offer for ASX-listed Australian Power & Gas Company Limited (APG). AGL will acquire 19.9% of APG's shares, and will make a recommended cash offer of A$0.52 per share for the remaining APG shares it does not already own. AGL's recommended cash offer is conditional on requirements including notification from the ACCC that it does not intend to oppose the acquisition and on AGL receiving at least 90% of APG's shares. The Australian reported that the acquisition is valued at $158 million.

ASX-listed Dart Energy announced on 15 July 2013 that it has entered into an agreement with Hong Kong HuiHua Global Technology Ltd in relation to the sale of its wholly owned Singaporean subsidiary, Dart Energy (FLG) Pte Ltd, for approximately US$20.8 million. Completion is subject to approval from various Chinese government bodies. In March 2013, Dart Energy was restructured to focus on its high - prospect shale acreage in the United Kingdom, and the company has sought to divest assets it now considers non-core, including Dart Energy (FLG).

ASX-listed Cue Energy Resources announced on 5 July 2013 that it has agreed to increase its interest in Woodside Petroleum's WA-389-P in Western Australia's Carnarvon Basin from 35% to 40%, subject to necessary regulatory approvals. BHP Billiton (Australia) Pty Ltd is also increasing its stake in WA-389-P from 40% to 60%, as Woodside exits the offshore project. BHP will assume operatorship. Cue Energy Resources sees significant remaining hydrocarbon potential in the permit, which is already substantially covered by 3D seismic. The block is located north of the Perseus and Rankin gas fields.

On 27 June 2013, Electricity Generating PCL (EGCO), Thailand's second largest private power producer, announced it has acquired the Boco Rock wind farm, south of Canberra for A$110 million. Boco Rock is a green field wind farm with an initial installed capacity of 113 MW, and is expected to be operating in February 2015. It has entered into a 15 year Power Purchase Agreement with EnergyAustralia Pty Ltd. EGCO is reportedly seeking other growth opportunities.

ASX-listed Senex Energy is finalising sale documents for its 15% interest in the Santos-operated Cuisinier Oil Field and its interests in ATP 752P in the Cooper-Eromanga Basin to existing joint venture partners following their exercise of pre-emptive rights. Bengal Energy Ltd announced on 26 June 2013 that it will increase its holding in the Cuisinier Oil Field and ATP 752P to 30.357% by exercising its pre-emptive right to purchase an additional 5.357% for A$7.6 million.


On 16 July 2013, ASX-listed Strike Energy Limited and ASXlisted Orica Limited jointly announced they have entered into a binding term sheet for the supply of up to 150 PJ of gas over 20 years from PEL 96, in which Strike has a 66.7% interest and is the operator. Under the agreement, Orica can provide up to A$52.5 million of gas pre-payments in order to secure its gas offtake as Strike achieves appraisal and development milestones. The deal will allow Strike to evaluate and commercialise a large prospective gas resource at PEL 96, which it says has 2.7 to 6.3 Tcf of gas (net to Strike).

On 5 July 2013, ASX-listed Cooper Energy Limited announced it has entered into non-binding agreements with ASX-listed Bass Strait Oil Company Limited. Under the agreements, Cooper Energy may acquire 25.8% of Vic/P41 and 50% of Vic/P68, located offshore in the Gippsland Basin, by funding approximately A$1 million of reprocessing, merging and analysis of multiple 3D seismic datasets. Cooper Energy acquired 19.9% of Bass Strait Oil Company in 2012.

On 4 July 2013, ASX-listed Drillsearch Energy Limited announced it has negotiated a joint venture with ASX-listed Santos Limited to develop and commercialise Drillsearch's wet gas assets in the Cooper Basin, PEL 106A and PEL 513. Under the agreements, Santos can earn a 60% interest and operatorship by farming-in for A$100-120 million. The agreements are supported by a Gas Sales Agreement for production until 2025. Drillsearch will also acquire an additional 29% interest in the Cooper Basin based Tintaburra Block Oil Joint Venture from Santos for A$36.8 million, and will sell its 25.8% interest in PEL 100 to Santos for A$15 million.


On 12 July 2013, The Australian reported that speculation of a takeover of ASX-listed Santos Limited has intensified, after the A$13.5 billion market capitalisation energy group's stock price rose 8.1% in the preceding week. Chevron or Exxon have been suggested as potential bidders.

On 8 July 2013, the Australian Financial Review reported that ERM Power is interested in the NSW state-owned electricity generator, Macquarie Generation, which owns two generators and is reportedly valued at A$2 billion. ERM Power, with an A$500 million market value, is said to be seeking bidding partners and has hired financial services provider UBS. Thailand-based Ratchaburi Electricity Generating, ASXlisted AGL Energy Limited and two Chinese state-owned corporations, Shenhua Group and China Huaneng Group, were also reported as potential buyers.

On 5 July 2013 the Dominion Post reported that ASX-listed AMP Capital Investors Limited is investigating potential acquisitions of energy distributors. The report confirmed AMP recently acquired a 42% stake in the New Zealand gas and electricity distributor Powerco from Brookfield Infrastructure Partners L.P. for US$408 million. The remaining 58% of Powerco is owned by QIC Limited.

The Australian Financial Review reported on 2 July 2013 that ASX-listed Beach Energy Limited is increasing a debt facility by A$150 million to A$320 million, promoting speculation it could target smaller rivals. According to the report, Beach Energy already had A$343 million on its balance sheet at the end of 2012 and received US$190 million from Chevron in a transaction in February. The report said Beach Energy may have as much as A$500 million in cash available before drawing any new debt, and suggested that instead of focusing on a small player, Beach Energy may be amassing a war chest to target a larger rival.



The Regulation amends the Electricity Regulation 2006 (Qld). The amending Regulation requires an itemisation of carbon and "green scheme" costs on household power bills. The bills must display an estimate of the impact of the Renewable Energy Target scheme costs on residential customer bills.


The Regulation amends the National Greenhouse and Energy Reporting Regulations 2008 (Cth) to reduce compliance costs for reporters under the National Greenhouse and Energy Reporting Scheme by streamlining reporting requirements. Amongst other amendments, statistical uncertainty associated with emissions reporting will only need to be calculated by reporters with the largest emission sources.


The Amendment Act was assented to on 21 June 2013 and amends the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (EPBC Act). The Amendment Act establishes significant impacts of coal seam gas and large coal mining developments on a water resource as a new matter of national environmental significance. The Amendment Act requires robust environmental impact assessment processes, and inserts associated penalty provisions, for developments that have or may have a significant impact on a water resource.

"Water resource" is broadly defined and it is likely that a much greater number of coal seam gas and large coal mining developments will now require approval under the EPBC Act. The Amendment Act does not allow actions that trigger the environmental impact assessment process to be approved by a State or Territory under a bilateral agreement, as was previously allowed under the EPBC Act.


The Regulation amends the Petroleum Resource Rent Tax Assessment Regulations 2005 (Cth) (the principal Regulations).

The Regulation extends the existing framework under the principal Regulations so it appropriately applies to onshore integrated gas-to-liquid operations and the North West Shelf LNG project. The Regulation also integrates gas-to-electricity operations, in response to the extension of the scope of the Petroleum Resource Rent Tax Assessment Act 1987 (Cth) in 2012.


On 17 July 2013, NSW Premier Barry O'Farrell announced the potential introduction of legislation to significantly strengthen landholders' rights during arbitration with coal seam gas companies in relation to land access. The potential amendments to the existing regulatory framework would prevent a licence holder from objecting if a landowner chooses to have legal representation, would require a licence holder to forego legal representation if a landholder chooses to do so, and would require a licence holder to pay reasonable legal fees for the entire negotiation period (not just the beginning) and the costs of an arbitrator. Premier O'Farrell said he would only proceed with the proposed amendments if there is a broad consensus amongst key stakeholders.



On 8 July, the Queensland government released the final recommendations of an Independent Scientific Panel examining the future of the underground coal gasification (UCG) industry in Queensland. The Panel considered the technical and environmental aspects of two separate trial UCG projects being conducted by Linc Energy and Carbon Energy.

The report suggests both companies have shown they can successfully commission and operate their technology. However, neither has yet demonstrated effective remediation of underground chambers.

The Panel's recommendations include that:

  • the Queensland government permit Carbon Energy and Linc Energy to continue their trial projects;
  • a process be established to demonstrate successful 'decommissioning' of the underground cavities used as part of the UCG process; and
  • until decommissioning is demonstrated, not to commence any commercial UCG facility.

The Queensland government has provided in-principle support to these recommendations. However, it will not make a final decision on the future of the UCG industry without the necessary data and information from Carbon and Linc's trial projects. In response to the Panel's report, Linc Energy said it was in the process of decommissioning a gasifier at Chinchilla.


The Queensland government has made the Central Queensland and Darling Downs draft regional plans (both dated June 2013) available for public comment. The draft plans seek to address land use conflicts between agriculture and resource activities. The plans are open for public consultation until 20 September 2013.

Proposed resource activities in designated Priority Agricultural Areas will need to meet assessment criteria as a condition of approval. The proposed assessment criteria are to be applied through existing approval processes, such as environmental authorities.

The State government is considering options to allow local governments to have a say in determining what are appropriate resource activities within a PLA.


On 17 July 2013, Prime Minister Kevin Rudd announced that Australia will move to an emissions trading scheme on 1 July 2014, one year earlier than previously planned. Under the previous arrangements, carbon was to be fixed at $25.40 per tonne until July 2015. Under a floating price, it is expected to be approximately $6 per tonne. The early transition is aimed to bring Australia into line with its major trading partners.


NSW state-owned electricity generator Macquarie Generation and biofuels company Algae.Tec have entered an agreement for the capture and reuse of emissions from Bayswater power station, one of Australia's largest coal-fired power stations. Algae.Tec will initially take 270,000 tonnes of carbon a year, which will increase to 1.35 million tonnes per year in the future. Carbon dioxide emissions will be fed into sealed tanks containing algae. The algae will be subsequently harvested and processed to create a projected 250,000 tonnes per year of sustainable transport fuels.


The Australian government's Clean Energy Finance Corporation will fund $37.5 million of debt for the Taralga Wind Farm, in New South Wales. The wind farm has an installed capacity of 106.8 MW, and is estimated to reduce Australia's carbon emissions by 250,000 tonnes per year. The Taralga Wind Farm has a 10 year Power Purchase Agreement with EnergyAustralia Pty Ltd. The funding will allow the project to use Australian sourced and engineered wind towers from Victoria-based manufacturer Keppel Prince Engineering.


In early July, the European Parliament voted in favour of temporarily removing a maximum of 900 million carbon permits from trade, out of approximately 1.7 billion. The initiative is intended to increase carbon prices. The UN secretary has supported the move, suggesting it is a clear indicator the European Union is committed to carbon pricing.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Most awarded firm and Australian deal of the year
Australasian Legal Business Awards
Employer of Choice for Women
Equal Opportunity for Women
in the Workplace (EOWA)

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.