Central signs Gas Supply Agreement with Arafura

Source: www.gulfoilandgas.com 2/12/2024, Location: Not categorized

Highlights
• Central Petroleum Limited (“Central”) has signed a gas supply agreement (“GSA”) with Arafura Rare Earths Limited subsidiary Arafura Nolans Project Pty Ltd (“Arafura”) for up to 6.85 Petajoules (“PJ”) of gas (net to Central) to be supplied to Arafura for up to 5 years from 2026. This includes a 2-year extension period which is subject to sufficient uncontracted reserves being available. The GSA is conditional on various conditions precedent being satisfied by Arafura by 30 June 2024.
• Central’s gas will be aggregated with existing Mereenie gas supply owned by Macquarie Mereenie Pty Ltd (“MM”), NZOG Mereenie Pty Ltd (“NZOG”) and Cue Mereenie Pty Ltd (“Cue”) (collectively the “Mereenie JV”), to supply a total of up to 27.4 PJ to Arafura over five years from 2026 (Central share: 6.85 PJ).
• The GSA is for firm gas supply, with take-or-pay provisions and a fixed price that escalates with the consumer price index.
• Pricing reflects strong market conditions.

New Gas Supply Agreement
Central today announces that it has signed a GSA with Arafura for the supply of up to 6.85 PJ of gas over five years from 2026. The GSA is for firm gas supply ex-field, with take-or-pay provisions and a fixed price that escalates with the consumer price index.

Gas supplied under the GSA will be aggregated with existing Mereenie gas supply from MM, NZOG and Cue to deliver up to 27.4 PJ of gas to Arafura from 2026.

Consistent with Central’s broader marketing activities, the ex-field pricing under the GSA reflects strong market conditions.

Arafura is developing the Nolans rare earth project, 135 kilometres north of Alice Springs, targeting one of the world’s largest undeveloped Neodymium and Praseodymium resources, critical to meeting rapidly growing global demand for electric vehicles and renewable energy technology.

Under the terms of the GSA, Arafura will be required to satisfy a number of conditions precedent by 30 June 2024 including confirmation of project approvals and a final investment decision, completion of power and transport agreements, and finalisation of debt financing.

Central expects to bring further gas to market, having increased its production capacity through the commissioning of the Palm Valley 12 well in November 2022 and recent well recompletions at Mereenie.

Leon Devaney, Central’s Managing Director and Chief Executive Officer commented, “This new gas supply agreement allows Central to broaden its customer base across the NT and demonstrates the critical role that gas has to play in the transition to a cleaner energy future.

We are delighted to provide our support to Arafura’s Nolans rare earths project and hope this will be the start of a long relationship.”

This ASX announcement was approved and authorised for release by Leon Devaney, Managing Director and Chief Executive Officer.


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