DBP has announced the successful completion of negotiations with the majority of its shippers that contract for firm full-haul gas transportation capacity on the Dampier to Bunbury Natural Gas Pipeline (DBNGP).
The renegotiated Standard Shipper Contracts (New SSCs) establish the tariff payable by the shippers for a period that extends from July 2014 until December 2020. The parties have also agreed to extend the term of the New SSCs to between 2025 and 2033 (with two further five year extension options).
The successful recontracting materially reduces DBP’s financial risk profile by significantly improving the business’ contract coverage beyond 2020.
Shippers who have agreed to the New SSCs will benefit from greater certainty of their gas transportation costs over this time period compared to the potential outcomes, when the ERA resets the regulated tariff, effective 1 January 2016.
Importantly, the contract term extension and greater volume certainty of the New SSCs has enabled DBP to reset its interest rate hedging program to take advantage of current low base interest rates.
DBP’s Chief Executive Officer Stuart Johnston said “This is an excellent outcome for both DBP and its key Shippers. It demonstrates that it’s possible to reach a pragmatic commercial outcome, providing greater certainty over the medium term.”