However it will mean plans to build a pipeline between Ballera in SW Queensland and Moomba will be cancelled for the time being.

The conditional agreement is designed to provide Origin with access to up to 200 petajoules (PJ) of gas at the Moomba Gas Hub in central Australia, with a mechanism to increase these quantities.

It is expected that the first gas to be swapped under the agreement will occur within the next three months. The amount of gas to be swapped in 2004 will depend on South Australian and New South Wales requirements.

Under the agreement, gas swapping would continue until the end of 2011.

Origin has agreed to deliver gas produced in its central Queensland fields to the South West Queensland gas partners at Roma in Queensland. The South West Queensland gas partners will then use this gas to meet part of their customer requirements in south-east Queensland.

In return for the gas from Origin, the South West Queensland gas partners will redirect (swap) an equal quantity of Cooper Basin produced gas to Origin at the Moomba Gas Hub.

These swapped gas volumes are expected to be used by Origin to supply its customer base in South Eastern Australia in conjunction with other supplies of gas, including Cooper Basin gas already purchased by Origin.

The companies said having access to swapped gas at the Moomba Gas Hub eliminates the need for Origin to construct major additional pipeline infrastructure in the short term.

Under the Heads of Agreement, the Cooper partners will receive swap fees from Origin for the quantities of gas to be delivered to Origin at the Moomba Gas Hub. The South West Queensland gas partners will also receive increased gas liquids revenue as a result of processing incremental gas at the Moomba Gas Hub, which recovers higher levels of gas liquids than the South West Queensland processing facilities at Ballera in south-west Queensland.

“This is a significant agreement for the Cooper Basin as it confirms Moomba’s standing as a key Australian gas hub,” said Santos’ managing director, John Ellice-Flint.

“It brings pipeline cost savings and greater supply flexibility to Origin Energy, along with additional Moomba Gas Hub revenue for the [Cooper Basin] Producers,” he said.

“The Cooper Basin processing, transport and storage assets are in a unique position to provide value-adding services to gas customers in the eastern seaboard states,” he said.

The interests of the South West Queensland Gas Producers are Santos 60.0625%, Origin Energy 16.7375% and Delhi Petroleum 23.2%.