Power and Water Corporation reveals NT emergency gas supply deals to cost almost $70m over two years
The Channel Island Power Station near Darwin uses natural gas sourced from the Blacktip field. (ABC News: Michael Donnelly)
Emergency deals to secure the Northern Territory's gas supply are set to cost territory taxpayers almost $70 million over two years, the Power and Water Corporation (PWC) has revealed.
PWC, a NT government-owned utility, has for the past two-and-a-half years relied on emergency gas agreements with LNG exporters to keep generators running because its contracted supplier, Eni, has not been able to meet demand.
PWC has a $5.5 billion supply contract with the Italian-owned Eni to take gas from its Blacktip gas field south-west of Darwin until 2034. But since early 2021, output from the Blacktip gas field has reduced by about 85 per cent.
ABC Rural has previously reported PWC's deal with Eni had locked in a price much lower than the spot prices it would be paying in emergency deals.
At NT estimates on Thursday morning, PWC said the shortfall in gas supply had cost it $43.4 million in the 2023-24 financial year and was estimated to cost $24.3 million next financial year.
"The revenue is down … it's a significant challenge," PWC chair Peter Wilson told estimates.
PWC's 2024-25 statement of corporate intent states its capital expenditure for 2023-24 was expected to go over budget by $14.3 million.
"Due to ongoing gas supply constraints, Power and Water is investing in infrastructure to allow sourcing gas from alternative supplies both within and outside the territory," Mr Wilson said.
Santos's Darwin LNG plant has been providing PWC with about 15 terajoules per day for the last few months, but the supply from the facility is expected to dry up before the end of 2024.
PWC forecasting Eni gas supply increase
However, PWC chief executive Djuna Pollard told estimates the corporation was expecting Eni to resolve its supply issues soon.
"We do fully anticipate that we will get back to the full entitlement under that Blacktip contract," Ms Pollard said.
Her answer came in response to a question from Shadow Energy and Renewables Minister Josh Burgoyne, who asked why PWC had projected its future gas revenue to increase despite Eni's supply issues.
"[Eni has] indicated this year there is some intervention work coming in the next one to two months … which will see in their predictions a small uplift in gas supplied from Blacktip," Ms Pollard said.
"And then there is a further drilling and development campaign planned for later this calendar year, which again is intended to realise an improvement in the gas supply levels.
"That's essentially the assumptions that are underpinning our forecast at the moment."
PWC started a dispute resolution process with Eni about a year ago due to the gas shortfalls.
PWC deputy chief executive John Pease said the utility, in the proceedings, would be seeking to "hold Eni account to its full responsibilities under the contract".
"We are asking questions as to why the gas was shut off. And we are pursuing the reasons for that," Mr Wilson said.
Ms Pollard also said PWC was still interested in pursuing contracts to buy and on-sell fracked gas from the Beetaloo Basin.
"The Northern Territory has huge reserves of gas which are expected to come online … and we are working hard to secure and support our position for essential service production with contracts from others," she said.
In April, the NT government signed a long-term deal with US gas company Tamboran Resources to provide the NT with 40 terajoules of gas per day from 2026.
On Wednesday, the NT government granted Tamboran Resources's Beetaloo development major project status.