MELBOURNE — Australia’s top gas pipeline company APA Group said on Monday it has scrapped a long-standing plan to expand into the United States and that its chief executive would step down.
APA first flagged in 2016 it was eyeing gas infrastructure assets in North America, the world’s biggest gas market, and missed out on a deal last year.
“We have been screening the U.S. utilities market for over three years now and whilst there are clearly attractive aspects to that market, it also involves a number of risks and ongoing investment challenges,” APA Chairman Michael Fraser said in a statement.
He said the company would focus on its competitive advantages in the Australian market, pursuing “very significant investment opportunities” stemming from the country’s transition to a low-carbon future.
Chief Executive Officer Rob Wheals, in the top job since 2019, said he would step down due to several factors, including tough conditions in the energy industry over the past few years and the added stress of the COVID-19 pandemic.
“This, together with the decision not to pursue an acquisition in the US, has led me to conclude that now is the right time to move on,” Wheals said in the statement.
While benefitting from strong gas demand in Australia, APA is facing pressure to diversify into renewable energy infrastructure amid an accelerating push away from fossil fuels.
The announcements came two days ahead of APA delivering its annual results. It said it expects to report 3.9% growth in underlying earnings to A$1.69 billion ($1.16 billion) for the year to June 2022, with a full year distribution of A$0.53 per share, also up 3.9% on a year earlier, in line with guidance.
APA’s shares fell 1.2%, slightly underperforming the broader market. ($1 = 1.4537 Australian dollars) (Reporting by Sonali Paul; Editing by Muralikumar Anantharaman)