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23 Nov 2015

Clayton Utz congratulates NT Government on $800 million NEGI pipeline project milestone

Sydney, 23 November 2015: Clayton Utz congratulates our client the Northern Territory (NT) Government on successfully closing the first stage of the landmark $800 million North East Gas Interconnector (NEGI) project.

The NT government announced last Tuesday 17 November that it had selected Jemena Northern Gas Pipeline Pty Ltd (Jemena) to construct and operate the 622 kilometre NEGI pipeline. The pipeline will run between Tennant Creek in the NT and Mount Isa in Queensland, delivering gas from the NT to eastern gas markets.

A multidisciplinary and cross-office Clayton Utz team advised the NT Government on all aspects of this first stage. Their role included developing the strategy for delivery of the project (involving two competitive processes in parallel, for the sale of surplus gas, and for the delivery of the NEGI and associated gas transportation services), negotiating the project documents with the two preferred proponents, evaluating initial and final proposals, and drafting the final project documents.

Partners Owen Hayford and Margie Michaels co-led the firm's project team, which included senior associate Gavin Phillips and senior lawyer Dipesh Jasmat in the Darwin office, Brisbane partner Andrew Smith and senior associate Natalie Watson, and lawyer Hannah Stewart-Weeks in Sydney. They were supported by a multidisciplinary Clayton Utz transaction team drawn from across the firm's Sydney, Darwin, Brisbane and Perth offices, which provided specialist input on workplace relations, insurance, finance, competition, environment and planning and native title law.

Co-lead partner Owen Hayford said the NEGI was the first infrastructure project in Australia in many years that has involved multiple jurisdictions and associated legal expertise. "With Margie Michaels leading our experienced infrastructure and energy team in Darwin, Clayton Utz was able to draw on the specialist skills of our lawyers across Australia in advising on all aspects of major infrastructure projects to assist the NT Government to achieve contractual close within 13 months with their chosen proponent, on very favourable terms," he said.

"The Northern Territory Government has secured in return for baseline gas shipments an entirely private sector financed, funded and developed pipeline. That is a great outcome for the NT Government and Territorians. At a macro level, it will significantly improve security of gas supplies to the Eastern seaboard and provide NT gas producers with a new market into which they can sell their gas, as well as stimulating the development of the Territory's vast on-shore gas reserves."

The NT has an estimated 200 trillion cubic feet of gas, which could power Australia for more than 200 years. NT chief minister Adam Giles described the project milestone as a "great outcome" and the first step towards a truly national gas grid.

The NT Power and Water Corporation (PWC) will be a foundation customer of the NEGI, having entered into a 10-year gas sale agreement with Incitec Pivot, at Phosphate Hill near Mt Isa.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.