TASMANIAN GAS PIPELINE

ENERGY

ASSET DESCRIPTION

  • A 734km subsea and onshore natural gas pipeline system, transporting gas from Victoria to Tasmania
  • Constructed and commissioned by Duke Energy in 2002, expected useful life of 70 years
  • Managed by Palisade Asset Management
  • $670m replacement value
  • 100% equity interest

INVESTMENT FUNDAMENTALS

  • Tasmania’s only source of natural gas
  • ‘Uncovered’ – not subject to economic regulation in the form of price and revenue controls. Tariffs negotiated on a commercial basis
  • Revenue underpinned by take-or-pay contracts to 2017-2018, indexed to CPI
  • Revenue sources diversified through electricity generation, industrial and residential

KEY RISKS AND MITIGATION

  • O&M costs and outsourced business management – mitigated by Palisade structuring agreements to include performance incentives to align interests
  • Renewal of supply contracts – mitigated by Tasmania need to diversify its power sources
  • Contract pricing is currently well below where it would be should the TGP become regulated due to the high asset value