Equus Energy (ASX:EQU) has signed a binding but conditional 10-year gas sales agreement with Alcoa (ASX:AAI) of Australia for domestic supply from its Equus Gas Project.
Under the agreement, Equus will make approximately 50 terajoules of gas available each day following project start-up, representing about 182 petajoules over the contract term.
The company says the volume is equivalent to approximately 5% of Western Australia’s domestic gas market and satisfies the project’s commitment under the state’s Domestic Gas Reservation Policy.
The announcement does not disclose the conditions attached to the agreement or a target date for first supply.
The deal establishes Alcoa of Australia as the project’s foundation domestic gas customer. Equus highlights the aluminium producer as Western Australia’s largest domestic gas user.
The gas agreement supports a broader funding arrangement that gives Equus access to up to US$30 million ($42.5 million) from Alcoa.
The funding is intended to advance pre-front-end engineering design (Pre-FEED) and front-end engineering design (FEED) work as Equus progresses towards a final investment decision (FID).
Managing Director Will Barker says securing Alcoa as both a customer and funding partner strengthens the project’s commercial position.
“Establishing Alcoa as our foundation domestic gas customer and funding partner for up to US$30 million provides a strong commercial platform as we move into the next phase of the project,” Barker says.
Equus reports that the technical phase of Pre-FEED supports a tie-back development using existing North West Shelf infrastructure and spare liquefied natural gas processing capacity.
The company says this approach could reduce development costs and allow the project to supply Western Australia’s domestic market and Asian LNG customers.
Equus has begun project partnering and commercialisation activities while progressing regulatory approvals ahead of FEED and a potential FID. The company owns 100% of the Equus Gas Project, which hosts contingent gas resources on the North West Shelf.
Write to France Pinzon at Mining.com.au
Images: Equus Energy
