The recent article published in The Australian significantly impacts on the NPV of the Warro Gas Field to TSV. The article confirms that the recent contract gas price was negotiated in $US and could increase to $US14/GJ in three years time.
With the POO currently undergoing a correction future WA contract gas prices IMO are set to rocket!?!
"In only the second Australian contract linking domestic gas to international oil prices, Citic's $US4.2 billion ($5.8 billion) Sino Iron ore project in the Pilbara will pay about $US7.80 a gigajoule (GJ) for its gas when oil prices are at $US50 a barrel, according to Santos yesterday".
"The Citic contract is fixed for three years, but after that is understood to be directly linked to oil prices, and at $US90 a barrel would deliver prices of around $US14/GJ to Santos".
"The DomGas Alliance in Western Australia commissioned a report from Economics Consulting Services. It shows that by 2014-15, the amount of additional natural gas needed in the state will be in excess of 1,100 terajoules daily, equating to a rise by some 100%. New projects coming online and requiring gas, as well as the looming renegotiation of existing contracts, will have an impact, and the demand is unlikely to be affected by the global financial crisis."
