APA Group, AGL Energy To Build Gas-Fired Power Plant At Mount Isa

Gas pipeliner APA Group (APA.AU) and AGL Energy Ltd. (AGK.AU) Thursday announced that they will jointly develop a 242-megawatt gas-fired power station at Mount Isa in the heart of Queensland state's minerals province.

The two companies also said they had signed an electricity supply agreement with Xstrata's Mount Isa Mines through to 2030 and starting late in 2013.

The power station--to be called Diamantina, after one of Queensland's major rivers--will consist of two 121-MW Siemens combined cycle, gas-turbine units. It will be fully operational by early 2014, APA said in a statement.

APA and AGL have finalized agreements with Perth-based engineering concern CTEC for construction under a fixed price contract, with support from Siemens, which will also provide major maintenance under a long-term service agreement, APA said.

APA and AGL are jointly seeking limited recourse project financing, with the total development cost expected to be about A$500 million.

AGL will supply gas to the power station for its first 10 years after which Xstrata will provide the gas.

-By Ray Brindal, Dow Jones Newswires; 612 62080902; [e-mail]