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Veris Limited (ASX:VRS) has bagged a service contract from APA Group Limited (ASX:APA) for providing survey and associated services for the new Northern Goldfields Interconnect (NGI) pipeline in WA.
The contract offered by APA comes under $460 million investment announced by the Group yesterday for constructing 580km, 12” pipeline in WA. The investment aims at connecting emerging gas fields in the Perth Basin to the resource-rich Goldfields region while forming an interconnecting gas grid across WA.
To Know More, Do Read: APA Group (ASX:APA) invests $460 Million in New Gas Pipeline in WA
Image Source: © Kalkine Group 2020
Details of the service contract
The Company estimates that the current service contract would generate more than $12 million in revenue for the wholly-owned subsidiary – Veris Australia, which has secured the contract. The expected duration of the service is around five months, and the NGI is estimated to be operational around mid-2022.
At present, the scope of the service contract includes centreline, feature, level, cadastral and subsurface surveys for the route proposed concerning the NGI construction. NGI would connect APA’s Goldfields Gas Pipeline which connects to APA’s Eastern Goldfields network, creating a pipeline network of 2,690kms from north to south and west to east.
The contract fetched by Veris Australia adds to the extensive pipeline survey portfolio delivered by the Company. Also, VRS estimates that it is well-positioned to leverage its experience and capability for the future gas pipeline.
Strong Working Relationship and Future Perspective
Commenting on the recent deal, CEO Michael Shirley cited that the company’s team has developed a strong working relationship with the APA Group over similar services provided by VRS to the Group.
Furthermore, Mr Shirley believes that with several gas pipeline developments currently under consideration across the continent, the contracted work for the Company could grow given its expertise and proven track record.
NGI Network to Bolster the Economy
APA Group anticipates that the investment of $460 million and the development of NGI pipeline would further spur economic growth in WA as it holds the potential to unlock hundreds of millions of dollars investment in the Goldfield region, enriched with gold, potash, and battery minerals.
The connection of the existing pipelines would increase gas supply options for consumers, opening up a new region for development, which would further support thousands of jobs before and after construction.
The development of NGI would also mark the divestment by APA from the Mid-West Pipeline Joint Venture, and at present, APA is in talks with Horizon Power to divest 50 per cent of its share in the JV.
