Alcoa to sell stake in Australian gas pipeline operator DBP for $154m

Alcoa of Australia has agreed to sell its stake in natural gas pipeline operator DBP to Duet Group in a transaction worth A$205m ($154m).

DBP, which is 20% owned by Alcoa of Australia and 80% by Duet, owns and operates the Dampier to Bunbury Natural Gas Pipeline (DBNGP).

Under the agreement, Alcoa of Australia will maintain its current access to 30% of the DBNGP transmission capacity for gas supply to its Kwinana, Wagerup and Pinjarra refineries in western Australia.

By selling the 20% stake in DBP, Alcoa anticipates a $10m to $15m profit.

Alcoa of Australia chairman Michael Parker said: "Duet is an experienced energy infrastructure asset owner and together with the DBP management team, they are committed to the ongoing success of the pipeline.

"Collectively, we have established a secure and valuable asset, which will serve Alcoa’s business and the state’s other natural gas consumers extremely well for many years to come."

Alcoa was part of a consortium in 2004 that acquired the pipeline. The company aims to close the sale in April and expects the net cash impact of the transaction to be $115m.

Currently, the DBNGP includes a parallel pipeline that runs alongside more than 80% of the original pipeline. It stretches nearly 1,600km and connects gas fields in the Carnarvon Basin off the Pilbara coast with population centres and industry in the south-west of the state.

The pipeline has been in operation since 1984, and has a remaining life of at least 50 years.

Alcoa of Australia is 60% owned by Alcoa, and the remaining 40% is owned by Alumina.

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Image: The view of Dampier to Bunbury Natural Gas Pipeline at Main Line Valve station #7, near Dampier, western Australia. Photo: courtesy of Glen Dillon.