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Incitec Pivot Limited today signed 10-year natural gas supply and transport agreements that secure the long-term future of its fertiliser manufacturing plants at Gibson Island in Brisbane.
Natural gas is the key feedstock for the production of ammonia, urea and ammonium sulphate fertilisers used by Australian farmers.
Incitec Pivot signed agreements with Origin Energy CSG Marketing Pty Ltd (Origin) and Queensland Gas Company Ltd (QGC) together with Pangaea Oil and Gas Pty Ltd (POG) for the supply of approximately 150 petajoules of gas over 10 years. Each of Origin and QGC/POG is contracted to supply approximately half of the Gibson Island facility's gas needs from mid-2007.
Incitec Pivot's agreement with QGC/POG will underpin development of production from the new Argyle coal seam gas field in the Surat Basin near Chinchilla in south-east Queensland. Under this agreement, Incitec Pivot will provide up to $5 million in development funding to QGC through unsecured redeemable convertible notes.
Incitec Pivot today also agreed terms with Australian Pipeline Trust (APT) for transportation of gas. APT is the owner and operator of the Roma to Brisbane gas pipeline.
All three agreements will take effect in the second half of 2007 on the expiry of Incitec Pivot's current supply contract. Each is subject to certain conditions including, in the case of QGC, reserve certification of its Argyle coal seam gas field.
"These agreements secure competitively priced gas for our Gibson Island plants until 2017 and strengthen our position as a low-cost Australian producer," said Incitec Pivot's Managing Director and CEO, Mr Greg Witcombe.
"This is a very welcome development for the company and its distributors, as well as for farmers in eastern and southern Australia who need a secure domestic source of nitrogen fertilisers."
"It is particularly good news for the 150 employees and contractors engaged at our manufacturing plants at Gibson Island."
Incitec Pivot is the only Australian company manufacturing urea, an essential nutrient for the country's primary producers who must achieve high productivity to remain competitive on world markets.
"These gas agreements announced today will ensure farmers have continued access to our Big N anhydrous ammonia fertiliser, quality granular urea and granular ammonium sulphate," Mr Witcombe said.
MEDIA CONTACT:
Neville Heydon
Corporate Affairs Manager
Tel 0408 123 160
INVESTOR RELATIONS:
James Fazzino
Chief Financial Officer
Tel 03 8695 4498
