Australasia Private Sale: Dampier Bunbury Pipeline

Article Abstract:

The State of Western Australia sold the 1,300-kilometer Dampier Bunbury Natural Gas Pipeline to Epic Energy in 1998 in the largest project-finance deal in the year; its successful closure earns it an award. DPNGP is a major strategic asset in Australia, having a monopoly on natural gas delivery from the North West Shelf Gas Project to Western Australia's southwest markets. Rival bidders included Nova Gas and CMS Energy/AGL. Epic officials said that the main reason for the purchase of DPNGP was its strategic nature, noting that Western Australia has three-quarters of the nation's gas supply as well as the greatest increase in projected demand. General manager David Bradley denies rumors that Epic overpaid for the asset. Syndication and offtake risks remain, but confidence is high. Regulatory issues are also significant , but the WA regulator is expected to decide on a higher allocated return.

Australia, Contracts & orders received, Gas transmission and distribution, Purchasing, Contracts, Gas transmission industry, Epic Energy (WA) Nominees Pty.

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Deal profile: Dampier to Bunbury gas pipeline

Article Abstract:

The 1,300 km Dampier to Bunbury natural gas pipeline, through which gas is transported from the offshore fields of the North West Shelf to industrial and mining operations in Western Australia, has been sold by the State of Western Australia to Epic Energy (WA) Nominees Pty for A$2.407 billion. Deutsche Bank was responsible for arranging the financing of the pipeline on behalf of Epic. The structure of the deal requires a refinancing two years before any large shipper contract expires, which could lead to any facilities outstanding being significantly reduced.

Gas Production and Distribution, Pipelines, Transportation, Western Australia

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Determinations of risk profiles

Article Abstract:

Australia's regulation of its gas industry must take risk factors into consideration when determining the rate of return. The rate must maintain competition while benefitting both the companies and their customers. Accidents such as the Esso/BHPP explosion in Victoria must be carefully accounted for in the calculation of risk factors.

United States, Regulation and Administration of Communications, Electric, Gas, and Other Utilities, Utility Rates Regulation, Utility regulations, Rate regulation

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