BHP Billiton Limited, together with its joint venture partner Esso Australia Resources Pty Ltd, today announced that a non-binding Memorandum of Understanding (MOU) has been signed with the AGL Wholesale Gas Limited (AGL Gas) for the sale of Gippsland gas. The MOU is subject to a number of conditions precedent.

The MOU covers the sale of 563 petajoules (P/j) of Gippsland gas to AGL Gas over 10 years from 2004 to 2013. The gas is for delivery into Victoria via the Gasnet system, and into New South Wales and the Australian Capital Territory via the Eastern Gas Pipeline.

“The deal will give the joint venture a long-term relationship with Australia’s largest energy retailer, AGL Gas. It also marks the beginning of an important new era for Gippsland gas extending beyond the existing Gascor contract,” said Terry White, Vice President Bass Strait, BHP Billiton Petroleum Pty Ltd.

Currently, the majority of gas entering the Victorian market is supplied under a long-term contract between BHP Billiton/Esso and the State Government owned Gascor. This contract is due to expire towards the end of the decade. The MOU with AGL Gas includes gas for delivery into Victoria in the period following the expiry of the Gascor contract.

"The deal will also give the joint venture an expanded role in supplying the NSW market where we currently supply around 20 per cent of the gas market," said Terry.

This MOU with AGL Gas follows the recent MOUs signed with TXU Electricity Ltd for the sale of Gippsland gas into Victoria and South Australia in the period 2004 to 2017.