Posco's Senex to go ahead with $708 mln Australian gas expansion

The logo of POSCO is seen at the company's headquarters in Seoul, South Korea, July 20, 2016. REUTERS/Kim Hong-Ji

MELBOURNE, Aug 11 (Reuters) - Senex Energy said on Thursday its owners, Korea's Posco International Corp (047050.KS) and Hancock Energy, agreed to invest more than A$1 billion ($708 million) to triple the company's gas output by 2025.

Senex, which began producing gas in Queensland state three years ago, has long planned to expand its output to 60 petajoules (PJ) a year by 2025 and now has the funding capacity from its new owners to do so.

The go-ahead comes as eastern Australia faces a gas supply crunch and soaring prices, with gas-dependent manufacturers pressing for cheaper supplies at a time when most of Queensland's gas output is being exported.

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Domestic customers in eastern Australia used around 580 PJ of gas in 2020, according to the Australian Energy Regulator. Competition for gas supply has grown as increasing volumes are going into power generation to back up intermittent wind and solar and more frequent coal-fired plant outages.

"This new investment to significantly boost domestic natural gas supply supports Australia's energy security," Senex Chief Executive Officer Ian Davies said in a statement.

More than two-thirds of the A$1 billion will be invested over the next two years on gas infrastructure and drilling wells in the Surat Basin in Queensland, but still needs regulatory approvals from the state and federal governments to go ahead.

Senex supplies gas to a range of big manufacturers, including packaging group Orora (ORA.AX) and cement maker AdBri (ABC.AX), as well as to the Gladstone liquefied natural gas (GLNG) export plant run by Santos Ltd (STO.AX).

($1 = 1.4116 Australian dollars)

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Reporting by Sonali Paul; Editing by Lincoln Feast.

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