Gas supplies for the Braemar contract will be sourced from Santos’ eastern Queensland gas fields, said Santos managing director John Ellice-Flint.

“This contract significantly increases the volumes of Santos gas being used in power generation in southeast Queensland,” Ellice-Flint said.

“The growth in new gas-fired power projects in eastern Australia, such as Braemar, will continue to significantly increase demand for gas over the next decade, and Santos is well placed to further participate in this growth opportunity.”

The 450 megawatt gas-fired Braemar power station, to be constructed at Braemar, west of Toowoomba, will supply electricity to the national market at peak periods, said APT CEO elect, Mick McCormack.

“The development of this project emphasises the importance of gas-fired power generation as part of the electricity generation mix for eastern Australia,” McCormack said.

“Gas-fired power projects of this type will be the key growth driver for gas usage for the next decade.”

McCormack said the agreement provided for firm service with a fixed revenue component that gave APT certainty for the 10-year period. There is also an interruptible service with a variable revenue component.

“Incentive mechanisms have been built into the interruptible service to encourage both parties to work cooperatively to optimise the power station’s performance,” he said.

The agreement builds on APT’s recent announcements of new contracts with Incitec Pivot Limited and CS Energy Ltd. The company said it further demonstrated the growth potential in its core pipeline assets.

The Project is being developed by Braemar Power Project Pty Ltd, a development vehicle of Babcock and Brown and ERM Power Pty Ltd.