Australian Gas Pipeline Giant Now Even Bigger

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Researched by Industrial Info Resources (Perth, Australia)--The owner of the largest natural gas storage and transmission network in Australia, APA Group (Sydney, Australia), has just gotten bigger with its acquisition of the Hastings Diversified Utilities Fund (Melbourne, Australia).

In December 2011, APA Group announced its intention to pursue the takeover of Hastings Diversified Utilities Fund (HDUF) through APA's wholly owned subsidiary APT Pipelines Limited (Sydney, Australia). At the time, APA already owned 20.7% of HDUF and expressed concerns regarding what they considered to be underperformance of HDUF management.

HDUF is the parent company and full owner of Epic Energy (Melbourne, Australia), which owns and operates the Moomba-to-Adelaide Natural Gas Pipeline and the South West Queensland Natural Gas Pipeline, totalling approximately 2,500 kilometers (1,550 miles).

Given APA's position as the largest owner and operator of natural gas pipelines in Australia, approval from the Australian Competition and Consumer Commission (ACCC) was required before APA could attempt a formal takeover. In July 2012, the ACCC gave informal clearance to the acquisition, and APA extended the deadline of its offer to HDUF shareholders.

Under Australian law, APA could seek the compulsory acquisition of remaining HDUF shares if 90% ownership were achieved. APA reached 94.1% ownership on November 14, 2012, and is expected to exercise its right to compulsory acquisition soon.

Gas can now be transported from the Moomba Gas Processing Facility, which is owned by Santos Limited (Adelaide, Australia), in the Strzelecki Desert and from the gas fields in south east and south west Queensland to the cities of Adelaide, Melbourne, Sydney, Canberra and Brisbane, serving 12.5 million people, or more than 55% of the Australian population, without leaving APA control.

Some critics of the move say that APA now holds too much control over the distribution of natural gas within Australia and that APA will soon have a stranglehold on the industry. APA has responded by saying their acquisition of HDUF gives them the ability to "supply more flexible and tailored services to better meet customers' requirements, whilst easing the transport of gas across pipelines and jurisdictions and enhancing security of the gas supply."

This acquisition brings the total length of Australian natural gas pipelines under the control of APA to 15,300 kilometers (9,500 miles). Jemena Limited (Mount Waverley, Australia), by comparison, controls roughly 1,800 kilometers (1,120 miles) of pipeline in Australia. The only other major stakeholder is the DUET Group (Sydney, Australia), which owns the 1,480-kilometer (920-mile) Dampier-to-Bunbury Natural Gas Pipeline.

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