The current Moranbah partners are CH4 Gas and BHP Billiton, but CH4 is currently moving to merge with Arrow while BHPB has arranged to sell its stake in the project to AGL.

Arrow Energy managing director Nick Davies said AGL would bring extensive operating experience and marketing expertise to Moranbah, the largest operating coal seam gas project in Australia with current annual production of 16 petajoules.

“Whilst Arrow and CH4 recently made an offer for the BHP interest, we regard the sale to AGL as very positive for the future development of the Moranbah Gas Project,” he said.

“The project is the sole supplier of natural gas into the Townsville market, with significant potential to supply the expanding Gladstone market in the future. AGL’s entry has the potential to enhance the joint venture’s gas market opportunities with AGL’s proposed 370MW gas-fired Townsville Power Station and possible joint initiatives targeting the central north Queensland region where there are significant future industrial developments planned.”

Davies also said AGL’s move into Moranbah would boost the Arrow-CH4 merged entity’s growing list of quality JV partners, which already includes CS Energy, Beach Petroleum and, potentially, GAIL (India).

On completion of the current merger between Arrow and CH4, the merged company will continue as the operator of the Moranbah Gas Project.

The merger between Arrow and CH4 will see the combined entity become Australia’s largest independent coal seam gas company in terms of market capitalisation and contracted gas sales.