PNG-Queensland Gas Project - From Orogen Minerals' half year report, August 12
During the first half of 1999, intensive efforts continued on a range of fronts directed at advancing the PNG -QLD Gas Project to a stage where all stakeholders would be prepared to commit to the project. The key areas of activity were as follows:
Market Definition - Negotiations on the terms of conditional Gas Sales Agreements with two Queensland.Government owned corporations, Energex and Ergon, negotiating on behalf of customers located in the north and south of the state respectively, were materially advanced.
Subsequent to the end of the quarter on 27 July 1999, agreement was reached with Energex on terms for the off-take of up to 130 petajoules of gas per year for supply to a number of industrial, commercial and domestic customers in south eastern Queensland. These customers included Tarong Energy, Comalco, Sithe Energy and CS Energy.
On 12 August 1999, a Conditional Sales Agreement with Ergon was initialled by the respective parties adding materially to the contracted demand for PNG gas by Queensland customers.
With the initialling of these agreements with Energex and Ergon, which are subject to approvals by respective boards, off-take commitments of sufficient quantity and price have been secured to ensure the commercial viability of the PNG-QLD Gas Project.
Project Infrastructure - Development of innovative ownership and financing structures has been successfully undertaken during the quarter. Project Sponsors are expected to select and start implementation of a preferred structure during the third quarter of 1999.
In addition to work on commercial arrangements for the development of PNG infrastructure, efforts during the remainder of the year will focus on the following activities:
* PDL 1/PDL 2 Cooperative Development Agreement - Formal agreements between the participants in the project need to be concluded to provide a cooperative framework for developing and operating the gas fields. As a result of these negotiations, final ownership interests and attendant financial obligations will be determined.
* Access Approvals - Agreement needs to be reached with the PNG Government and landowners on the specific terms of development of the PNG-QLD Gas Project. Compensation agreements with Australian landowners also need to be finalised based on the Heads of Agreement that have already been executed.
* Front-End Engineering - Advanced planning and preliminary design of all elements of the Project needs to be undertaken and contract packages prepared. This will include preparation of detailed project capital and operating expenditure budgets.
Orogen Minerals, August 12
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