Central Petroleum (ASX:CTP) has agreed to extend its 2-year gas supply agreement with a subdiairy of ASX 200-listed South32 (ASX:S32) by 12 months.

Under the extended deal, Central Petroleum will supply a further 0.36 Petajoules (PJ) of gas to South32 Cannington in 2025

The extended agreement is conditional on transportation agreements to be finalised by the sellers by 30 June 2024. 

Gas supplied under the agreement will be aggregated with existing Mereenie gas supply from Macquarie Mereenie (MM), NZOG Mereenie, and Cue Mereenie in order to deliver up to 1.46 PJ of gas to South32 in 2025. 

The $39.38 million market capitalisation company says the agreement is for firm gas supply to Mount Isa, with take-or-pay provisions and a price that escalates with the consumer price index. 

Central anticipates to bring further gas to market, having ncreased its production capacity through the commissioning of the Palm Valley 12 well in November last year and recent well completions at Mereenie. 

Commenting on the extended agreement, Central Petroleum Managing Director and Chief Executive Officer (CEO) Leon Devaney says: “We are delighted to extend our relationship with South32 and continue our supply of gas to eastern Australian markets at this time of market uncertainty and supply shortages.”

“We are delighted to … continue our supply of gas to eastern Australian markets at this time of market uncertainty and supply shortages”

Central Petroleum is an established oil and gas producer with exploration and appraisal permits in Queensland and the Northern Territory. As of 30 June 2023, the company had $13.8 million cash at hand, according to its latest quarterly report. 

Write to Aaliyah Rogan at Mining.com.au

Images: Central Petroleum