Amplitude JV Deal to Boost Gas Supply from Otway Basin

Amplitude Energy (ASX: AEL) has signed a binding joint venture agreement with O.G. Energy to expand the East Coast Supply Project (ECSP), aiming to mitigate Australia’s looming gas shortfall.

Amplitude's Athena Gas Plant in the Otway Region, Victoria, Australia. Since December 2021, the Athena Gas Plant has processed gas and liquids from the offshore Casino, Henry, and Netherby fields.

Strategic Partnership to Bolster Gas Security

Amplitude has formed a 50/50 joint venture to develop the ECSP. The deal includes a three-well drilling program, hoped to supply up to 90 terajoules per day (TJ/d) through the starting in 2028 - subject to regulatory approvals and successful execution. The projected output equates to the gas demand of over 600,000 Victorian households.

Under the agreement, O.G. Energy will fund its 50% share of future ECSP costs and reimburse Amplitude Energy approximately A$25 million for past expenditures. Additionally, the partnership aligns ownership interests in key offshore permits containing the Annie gas discovery and the Nestor prospect.

Amplitude Energy’s Managing Director and CEO, Jane Norman, described the agreement as a crucial step in securing additional domestic gas supply. “The ECSP is structured to minimize exploration risks and maximize the use of existing infrastructure, ensuring gas reaches the market as soon as possible. O.G. Energy’s investment is a strong endorsement of both our assets and the broader market opportunity,” she said.

Otway Basin geological map.

Macroeconomic Tailwinds and Energy Market Implications

The ECSP agreement comes amid increasing concerns over Australia’s energy security. The Australian Energy Market Operator (AEMO) warned of potential gas shortfalls in the southern states from 2028, highlighting the need for new domestic supply sources. 

In a recent policy backflip, the Victorian Government has recognized the need for a stable gas supply during this transition period, which may provide opportunities for projects like the ECSP that utilize existing infrastructure and focus on domestic supply security.

Compounding these concerns, global energy markets remain volatile, with ongoing geopolitical instability impacting supply chains and pricing dynamics. The ECSP’s ability to leverage existing brownfield infrastructure positions it as a cost-effective response to these supply challenges.

Market Reaction and Outlook

With a total project cost estimate of A$240–270 million for Phase 1 and A$140–185 million for Phase 2, Amplitude Energy plans to fund the ECSP through a combination of existing cash reserves, free cash flow, and bank debt facilities.

The company is also in discussions with potential gas customers for foundation contracts to support the project’s commercial viability.