PNG pipeline: Big customers sign 20-year supply contracts. The Australian, July 28
By RICHARD SPROULL
PIPING Papua New Guinea natural gas through to south-east Queensland is another
step closer to reality after four foundation customers signed 20-year supply contracts
to take up to 130 petajoules of gas a year.
Pipeline proponents Chevron Asiatic, Oil Search, Orogen Minerals and their partners
agreed on price, volume, terms and conditions for the supply of gas to Comalco,
Sithe Energies and State-owned electricity generators Tarong Energy and CS Energy
after 70 days of negotiations with Energex, a government power utility which acted as
an "aggregator" and agent for the customers.
Shares in all the key listed players rose in response to the agreements, with Oil
Search shares climbing 12c to close at $2.38 and Orogen Minerals finishing 9c higher
at $1.90.
Energex subsidiary Allgas had earlier signed purchase agreements with the four
customers ahead of yesterday's deal, which now places the base load requirement for
the pipeline well within reach.
The Allgas contract "is effectively the green light for the PNG gas pipeline, with the
foundation customers now agreeing on price, gas volumes, fundamental terms and
conditions", Queensland Premier Peter Beattie said.
Analysts speculate the price paid was between $2 and $2.50 a gigajoule, though
neither the customers nor the proponents would discuss the tariff.
The contracts, which must be ratified by the companies' board of directors, account
for around 70 per cent of the sales required for final approval on the $3.7 billion
project.
"This contract alone is very close to the foundation volumes required to underpin the
development of the PNG gas project," Chevron project director John Powell said.
Comalco has been allocated 20 petajoules a year and will move into the final
feasibility study for its proposed $1.4 billion alumina refinery at Gladstone.
It is also close to signing preliminary supply contracts with Malaysian energy
producers for the same scale plant in Sarawak and expects to choose between the
sites after completing separate studies.
Of the other customers, Tarong Energy plans to build a 700 megawatt power station
at Wivenhoe, CS Energy proposes building a 350MW station at Swanbank and Sithe
Energies has proposed construction of a 350MW station at Gibson Island at the
mouth of the Brisbane River.
The project proponents are now waiting on signing of a contract to supply 50
petajoules of gas annually to customers in northern Queensland represented by
State-owned utility Ergon Energy.
Chevron and its partners will soon begin a $US60 million ($92.3 million) front-end
detailed engineering design for the 2100km pipeline, ramp-up financing, work on the
product development licence and negotiate access with landowners in the PNG
southern highlands in the lead-up to a green light on the project.
theaustralian.com.au |
