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Contact coughs up $12M to NGC

By Phil Boeyen, ShareChat Business News Editor

Friday 27th July 2001

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Natural Gas Corporation (NZSE: NCH) will receive an upfront payment of $12 million for allowing Contact Energy (NZSE: CEN) to change the conditions of a gas supply agreement.

Contact inherited the agreement when it purchased the Orion gas customer base last year.

The deal called for Contact to purchase up to 10 petajoules of gas per year from NGC up until 2007, with Contact obliged to pay an annual commitment fee and a pre-defined price.

The two companies have now agreed to shorten the term to the end of September next year rather than 2007, with Contact no longer having to pay annual commitment fees after that date in return for the $12 million payment.

Contact CEO, Steve Barrett, says the company is pleased to have changed the deal, which will help it to further rationalising its gas portfolio.

NGC has also welcomed the new agreement, saying it provides more flexibility to manage its gas in the future.

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