The amendments involve the supply of additional gas from the BHP Billiton/Esso Gippsland Basin producers, AGL said.

In the first change, AGL and the Gippsland Basin producers have agreed to amend the terms of the existing 14-year contract. In addition, AGL has restructured its arrangements under the Gascor contract - also supplied by the Gippsland Basin producers – between 2008 and 2009.

AGL said the changes would result in a reshaping of the contractual off-take profile and enhance the ongoing price competitiveness of its wholesale gas portfolio.

“The amended arrangements agreed with the Gippsland Basin producers reflect the on-going competitiveness of Gippsland gas,” AGL managing director Greg Martin said.

Martin said he was disappointed that recent negotiations over future pricing with AGL’s other major gas supplier, the Santos-led Cooper Basin producers, had failed to reach a satisfactory outcome.

“The terms of our Cooper Basin contracts will now be subject to a formal price arbitration process to determine the price of gas to be supplied for the period July 1 2007 to June 30 2010,” he said.

“AGL remains confident this formal process will produce an outcome consistent with the realities of a competitive wholesale gas market.”

The company currently holds various gas sales contracts with South Australian and South West Queensland Cooper Basin Producers from the Cooper Basin for 605PJ, which terminate at the end of 2006, 2011 and 2016.

AGL also holds two Gippsland Basin contracts with Gascor and Esso/BHBP for 1,200PJ contract, which expires at the end of 2009 and 2017 respectively.

In addition, it has: a 1500PJ contract for PNG gas, with Oil Search, Exxon Mobil, MRDC and Nippon Oil Exploration Ltd, which ends in 2028; a 335PJ contract to expire in May 2020 to buy gas from Origin Energy in the Surat Basin; and a Sydney Gas/AGL contract for 145PJ from the Sydney Basin, which ends in 2015.

These gas sales contracts are worth a total of 3,785PJ to AGL.