Peter Munns, Director ANZ Infrastructure Services, discussed ANZ’s role in pipeline investment which has included the Kambalda to Esperance gas pipeline and the Carisbrook to Horsham gas pipeline in Victoria. He outlined three factors now driving institutions to strongly consider infrastructure;

  • The huge volume of mandated superannuation contributions looking for a home;
  • The realisation that infrastructure returns are not correlated to returns from other asset classes; and,
  • Rate of return expectations of investors may not be met by traditional asset classes such as shares and bonds on the medium term.

Mr Munns referred to an AusCID report which has estimated under investment in all sectors of Australian infrastructure of around $25 million – 10 per cent of this in the gas pipeline sector.

The ANZ Infrastructure Group is seeking partnerships with industry for greenfields pipeline development. The Group is currently evaluating opportunities for the Trans-Territory pipeline in conjunction with Australian Pipeline Trust and AJ Lucas – AMEC Spie Capag.

Mr Munns indicated that the role of institution investors would include;

  • Providing access to equity for existing assets in greenfields development;
  • Investment banking skills including project advice and financial structuring; and,
  • Building on significant experience to date across all aspects of the energy infrastructure and utility markets.

Michael McCormack, Chief Operating Officer with APT discussed the major changes which have taken place in Australia’s pipeline industry over his 20 years involvement in the sector. He indicated that the three major challenges of managing pipelines today centred around responsibility, return on investment and managing regulatory threats.

Under responsibility he outlined the challenges under the new ownership model of passive investors. He noted the increasing tendency to decouple pipeline ownership and pipeline management and emphasised the importance of new “trust” owners being fully aware of their responsibilities as asset owners. There are some important emerging challenges for aging pipelines including whether to replace assets or maintain them at increasing cost.

He also noted that the new ownership model would pose issues relating to capital management, long term investment in the pipeline sector and the investment in greenfields gas projects.

On regulation he emphasised the importance of avoiding unnecessary regulation (eg. revocation of Moomba-Sydney pipeline) and implementing the Productivity Commission’s findings from the recently completed Review of the National Gas Access Regime.

In conclusion he emphasised that the management imperatives were:

  • Getting the balance right on asset safety and integrity.
  • Continued investment in industry representation, including support for APIA.
  • Retaining industry knowledge in a rapidly changing environment where future career paths will be very different to the past.

Ashley Kellett, General Manager of the SEA Gas Pipeline, discussed the history of the project including the role of foundation shippers and the fact that the pipeline represented a customer led solution to gas supply to South Australia. He indicated that important lessons to be learnt from the SEA Gas experience were:

  • The turnkey contract allowed for project financing to be expedited.
  • The pipeline was built despite regulation rather than because of it.
  • The infrastructure was customer driven in terms of security of supply and competitive supply arrangements.

In looking forward he indicated that the pipeline had been a spectacular success in delivering much needed gas to South Australia during the Moomba gas supply outage and that future challenges would be regional development (ie. laterals from the SEA Gas pipeline), innovation and education.