The APA Group (ASX: APA) share price is in focus after the company announced a $700 million final investment decision to proceed with the Bulloo Interlink Pipeline, complemented by a new five-year gas transport and storage agreement with Origin Energy.
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What did APA Group report?
- Committed $700 million for construction and commissioning of the Bulloo Interlink Pipeline (BIL)
- Entered into a five-year, inflation-linked, take-or-pay gas transport and storage agreement with Origin Energy
- BIL forms part of Stage 3B of APA's East Coast Gas Grid (ECGG) Expansion Plan
- Stage 3 expansion will deliver ~30% more north-to-south gas transport capacity on completion
- Expected to increase north-to-south transport capacity on the ECGG by over 50% since 2023
What else do investors need to know?
The Bulloo Interlink Pipeline is designed to ease constraints and help meet projected gas demand for Australia's east coast markets well into the 2030s. The new capacity will link Queensland's South West Queensland Pipeline with the Moomba to Sydney Pipeline in New South Wales and is expected to deliver a maximum capacity of 800 terajoules per day.
Construction is scheduled to start in early 2027, subject to approvals, with commercial operation targeted for winter 2029. APA will use existing balance sheet capacity to fund the project, aiming for returns above its hurdle rates and anticipating a reliable, inflation-linked revenue stream from the Origin contract.
What did APA Group management say?
APA Chief Executive Officer and Managing Director, Adam Watson, said:
Delivery of the BIL is critical to east coast energy security, unlocking the significant volumes of gas available in Queensland and the Northern Territory and complementing our earlier ECGG investments.
The BIL is designed to ensure pipeline capacity is not a constraint to meet projected gas demand for Australia's southern states later this decade and into the early 2030s. AEMO's 2026 Gas Statement of Opportunities was clear that unlocking northern gas supply and expanding existing pipelines will push out projected shortfalls in southern markets into the 2030s. Beyond the BIL, APA can deliver further capacity increases, incrementally, to ensure east coast gas demand continues to be met by APA's pipeline and storage infrastructure.
We are also proud to continue our longstanding partnership with Origin Energy. The five-year agreement announced today demonstrates the strong ongoing relationship with Origin and demand for contracted capacity across our east coast assets more broadly.
We are confident there will be increasing demand for gas transport and storage capacity to support long-term energy security and transition over the longer term. Incremental investment in new pipeline capacity is a reliable and cost-efficient way to meet the needs of our customers and support Australia's energy market more broadly.
What's next for APA Group?
APA's immediate focus is on advancing environmental approvals, detailed pipeline design, and procurement for the BIL, while continuing stakeholder engagement for responsible delivery. The company expects revenue from the pipeline to ramp up over approximately five years post-commissioning.
Beyond the BIL, APA has flagged additional opportunities for incremental expansion of east coast pipeline capacity to maintain reliable supply. Its $3.5 billion organic growth pipeline aims to help secure Australia's energy future and meet customer needs as the energy transition progresses.
APA Group share price snapshot
Over the past 12 months, APA Group shares have risen 28%, outperforming the S&P/ASX 200 Index (ASX: XJO), which has declined 2% over the same period.
