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25-year gas storage agreement between Snowy Hydro and Lochard Energy

Snowy Hydro and Lochard Energy have signed a 25-year gas storage agreement at the Iona facility in Australia, to support Snowy Hydro's gas-fired power stations from 2028.

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Snowy Hydro has signed a 25-year gas storage agreement with Lochard Energy, starting in January 2028, at the Iona underground gas storage facility in Australia. The agreement is designed to secure the gas supply needed for Snowy Hydro’s gas-fired power stations.

Agreement details

The agreement comes against a backdrop of energy transition in Australia, where the emphasis is on more diversified energy sources. Snowy Hydro will benefit from the gas storage capacity to keep its gas-fired power stations in Victoria and New South Wales running.
Snowy Hydro’s LaTrobe Valley, Laverton and Colongra gas-fired power stations have a total capacity of 1,290 MW. In addition, a new 660 MW gas-fired power station is under construction at Kurri Kurri in the Hunter Valley.

Lochard Energy Expansion and Projects

Tim Jessen, CEO of Lochard Energy, said the agreement will support the expansion of the Heytesbury underground gas storage project, increasing the capacity of the Iona gas storage facility.
At the same time, Lochard Energy is carrying out a feasibility study for the H2RESTORE project, exploring the possibility of underground hydrogen storage, with partial funding from the Australian Renewable Energy Agency (ARENA).

Impact on the Gas Market

In June, the Australian Energy Market Operator (AEMO) warned of the risk of gas supply shortages on Australia’s east coast, due to reduced delivery capacity from storage facilities. The shortages are expected to last until September 30.
To address these challenges, measures such as investing in new gas sources, maximizing existing production, and accelerating the construction of LNG import terminals have been suggested.
The agreement between Snowy Hydro and Lochard Energy is part of this dynamic, ensuring better management of gas supplies and an appropriate response to market fluctuations.

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