Australian energy infrastructure operator APA Group has approved an additional A$700 million (USD $487 million) investment in the Bulloo Interlink Pipeline, advancing a major expansion of the country’s east coast natural gas network as southern states face projected supply shortages.

The final investment decision follows APA’s commitment of A$220 million in February 2026 for preliminary development work, bringing total committed investment in the project to A$920 million.

The decision is underpinned by a five-year, take-or-pay gas transportation and storage agreement with Origin Energy, providing contracted revenue to support the investment.

The agreement, which includes inflation-linked payments, takes effect on January 1, 2028, following the expiration of Origin’s existing arrangements. It covers seasonal transportation capacity across several major pipelines, including the South West Queensland Pipeline, Moomba to Sydney Pipeline, Roma to Brisbane Pipeline and the Bulloo Interlink once operational.

The approximately 340-kilometer Bulloo Interlink Pipeline will connect APA’s South West Queensland Pipeline in Queensland with the Moomba to Sydney Pipeline in New South Wales.

Designed to transport up to 800 terajoules of natural gas per day, the underground pipeline will increase the volume of gas that can be moved from northern production regions to demand centers in southern Australia.

Construction is scheduled to begin in early 2027, pending regulatory approvals, with commercial operations targeted for winter 2029.

The investment comes as Australia’s east coast gas market faces growing pressure from declining production in southern basins.

The Australian Energy Market Operator’s 2026 Gas Statement of Opportunities warned that production from established southern gas fields could decline by 46% over the next five years, creating a need for additional supply and infrastructure investment from 2030.

Although near-term market conditions have improved, AEMO warned that longer-term shortages remain a risk without new production, storage and transportation capacity.

Expanding pipeline infrastructure to transport gas from Queensland and the Northern Territory could help delay projected shortages in southern markets into the 2030s.

The Bulloo Interlink represents Stage 3B of APA’s broader East Coast Gas Grid expansion program.

Combined with Stage 3A, which is scheduled for completion in winter 2028, the expansion is expected to increase APA’s north-to-south gas transportation capacity by approximately 30%.

Once the entire third stage is completed, the company’s north-to-south transportation capacity will have increased by more than 50% compared with 2023 levels.

APA Chief Executive Adam Watson said expanding the network would help ensure sufficient transportation capacity is available to meet southern Australia’s future natural gas requirements.

The company expects the Bulloo Interlink investment to generate returns above its internal investment thresholds, with revenues increasing progressively over approximately five years after commissioning.

APA plans to finance the project through its existing balance sheet capacity rather than relying on new funding arrangements.

The investment forms part of APA’s approximately A$3.5 billion organic growth pipeline and is expected to reduce some longer-term maintenance capital requirements on the Moomba to Sydney Pipeline.

The project also strengthens APA’s position in Australia’s domestic gas infrastructure market as producers and utilities seek greater flexibility to move gas between northern supply basins and southern consumption centers.

However, increasing pipeline capacity alone will not eliminate the risk of gas shortages. The success of the broader expansion strategy will also depend on the development of additional gas production to fill the network.

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