PNG gas pipeline project: Queensland energy policy welcomed - PostCourier, May 25
THE billion kina PNG Gas project received a big boost yesterday following the release of the Queensland Government's energy strategy.
The paper confirms Government support for environmentally friendly energy among other initiatives.
The partners in the billion kina project welcomed the commitment.
Two of the proponents of the project - Orogen Minerals and Oil Search, which have significant interests in the fields where the project would source its supply from - said the announcement represented a major milestone.
Oil Search managing director Peter Botten said the policy announcement represented a significant milestone for the project.
"It provides the favorable environment required to close commercial gas contracts with customers in Queensland and provides the necessary certainty to project sponsors and their many customers about the policy settings in which they will operate in the coming years," he said.
"The policy is a ground breaking initiative . . . ensuring sound commercial development of gas and environmentally responsible fuels, together with coal, as the key energy sources for development of the State."
The policy ensures that gas fired generation or renewables will make up at least 15 per cent of the State's electricity market by 2005.
Mr Botten said this was important in providing market certainty for gas-based generation on sound commercial terms.
The Queensland Government also announced that it was working with the AGL Ltd and Petronas joint venture to advance construction of the gas pipeline by first building the Townsville to Gladstone section.
AGL and Malaysia-based Petronas are building the pipeline. The section to be built by the Government represents about 25 per cent of the total length of the Australian portion of the line.
Subject to successful closure of commercial agreements, construction should commence on this portion of the pipeline later this year, with completion of the line by mid 2002.
Construction would then move towards the north with the pipeline built to carry the full forecast load for the PNG project.
Mr Botten said the release of the energy policy adds further momentum to the project, following other recent announcements, with Comalco Ltd choosing Gladstone as the preferred site for its $1.4 billion alumina refinery.
The refinery is expected to be powered by PNG gas.
It also follows an agreement by the participants in the Hides and Kutubu gas fields to dedicate sufficient reserves to the Queensland market for at least 30 years.
PNG Gas project director Dr John Powell said the release represents another milestone in the development of the broad economic framework that is required to enable the project to be realised.
"The combination of this policy and the introduction of competitive energy into Northern Queensland via the PNG Gas project would create a level of regional development not previously experienced,'' he said from Brisbane.
The focus of the project developers, Chevron Services Australia, is to now close gas contracts with customers as soon as possible within the framework of the policy.
There will also be further emphasis on clarifying the PNG Government position on ownership of the PNG infrastructure and various financing issues.
Clarification of a number of policy and fiscal issues has also been sought from the Federal Government in Australia, concentrating on support from their PNG counterparts.
Orogen Minerals Ltd also welcomed the initiatives of the energy policy.
"The policy release represents another major milestone in the development of the broad economic framework required to enable the world class PNG Gas project to proceed to development," it said.
"It paves the way for work to accelerate the negotiation of binding Gas Sales Agreements to replace the conditional Gas Sales Agreements signed with two Queensland Government owned corporations, Energex and Ergon in July and August of 1999."
Orogen is a founding partner in the consortium formed to evaluate the feasibility of the project
Orogen currently holds interests in the Kutubu (25 per cent) and Gobe Main (30 per cent) gas fields as well as an option to acquire a 20.5 per cent interest in the Hides Gas field.
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