THE Northern Territory government's decision on a lower-cost northern route through Queensland to link its gas pipelines with the national grid has been branded as "silly" by South Australian resources minister Tom Koutsantonis who is warning it could mean higher rather than lower prices for gas users in the south-east.
Australian Industry Group chief executive Innes Willox was also among critics of the NT government decision to link into the grid through a $800 million pipeline to be built from Tennant Creek to Mt Isa.
They said the federal government should have been more involved in the process to ensure the benefits of the project are felt further south than Queensland, where fertiliser maker Incitec Pivot will be an immediate recipient of the gas.
NT Chief Minister Adam Giles on Tuesday announced China-controlled Jemena had won the competitive tender for the contract to build the North East Gas Interconnector, as revealed by The Australian Financial Review's Street Talk Online on Monday.
Two other bidders in the tender had proposed a more expensive southern route for the pipeline, that would have linked Alice Springs with Santos's major gas processing plant at Moomba from where it could more easily reach NSW where it is most needed.
Mr Giles called the project "historic" and said it would not require any cash from taxpayers.
"This nation-building project will generate investment in regional infrastructure and deliver real jobs with no financial commitment from taxpayers," Mr Giles said.
Queensland Premier Annastacia Palaszczuk described it as "a coup for Queensland" and said it would create 560 construction jobs across the 600 kilometre line, which would be completed in 2018.
The NT government struck a deal to supply gas to fertiliser maker Incitec Pivot at Mount Isa, providing the initial volumes of gas that will flow through the line. The gas is surplus gas being bought under contract by NT utility Power and Water.
"The market has spoken," said Australian Competition and Consumer Commission chairman Rod Sims, who said the project would be significant in increasing supply for east coast market.
"It's great that the line will get built; there was a lot of scepticism about whether this was going to happen. Now it is going to happen it does open up a lot of optionality," Mr Sims said.
With the northern route, supplying NT gas to Sydney would increase the cost by about $1.40 a gigajoule compared to using a link to South Australia, one source said. But others noted that the Mt Isa route would still help NSW by freeing up gas further south.
Still, South Australian Premier Jay Weatherill had written to federal government ministers and Mr Giles to press the case for the NEGI pipeline to run south, pointing out that while the length of the new pipeline would be longer, that route would "provide the best long-term benefits" to NT, South Australia and east coast gas markets.
