QPM Energy Pty Ltd (QPME), the wholly owned subsidiary of Queensland Pacific Metals Ltd (ASX:QPM), has entered into a memorandum of understanding (MOU) with Ratch Australia Corporation Pty Ltd to secure 100% of the Townsville Power Station’s (TPS) generation capacity.
Ratch Australia currently owns the entirety of TPS, which comprises a 160MW Siemens turbine and an 82MW heat recovery steam generator.
QPME’s acquisition of the Moranbah Project includes a contract for the dispatch and direct sale to the national electricity market (NEM) for 100% of the electricity generation capacity of the 242MW TPS.
The Moranbah Project holds the exclusive right to the electricity generated from the gas it supplies to TPS, while Ratch Australia is responsible for the operation and maintenance of the power station.
Boost in gas production
The Moranbah Project presently yields approximately 10 petajoules (PJ) of gas annually, around 7PJ of which is sold to Dyno Nobel.
Post completion of the deal, Queensland Pacific Metals projects a boost in gas production to 12-13PJ annually within half a year.
To meet the increasing demand of QPM's proposed TECH Project, QPME aims to escalate gas production from the Northern Bowen Basin to more than 20PJ annually in line with the TECH Project's construction.
Thus, TPS becomes pivotal as it offers a utilitarian application for increased gas production.
Key terms
QPME and Ratch recognise the strategic commercial rationale in entering a new PPA and have entered into a non-binding MOU to highlight the intent of the parties. The key terms of the MOU are:
- During the term of the MOU, Ratch will exclusively deal with QPME regarding the electricity generation capacity of TPS (binding);
- During the term of the MOU, QPME will exclusively deal with Ratch regarding the sale/supply of gas from 2025 onwards and will not negotiate with any other power stations or electricity generators (binding);
- QPME and Ratch will negotiate in good faith to enter into a new PPA commencing upon the expiry of the existing PPA;
- The MOU expires on the earlier of August 31, 2023, or when a new PPA is executed.