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Gold/Mining/Energy : Lundin Oil (LOILY, LOILB Sweden) -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (1169)	7/2/1999 4:05:00 AM
From: Greywolf	Read Replies (1) \| Respond to of 2742

Port Moresby, Papua New Guinea, July 2, The partners in a proposed US$3.5 billion plan to pipe natural gas from Papua New Guinea to Australia are ready as soon as Aug. 1 to start spending US$60 million on the next phase of the project. Talks with potential customers for the gas in Australia's Queensland state, which may include Comalco Ltd., Australia's largest aluminum producer, are in their final stage and the partners aim to reach agreement this month on firm sales contracts. ''We're encouraged by current negotiations with the market,'' said Cliff Leggoe, a spokesman for Chevron Corp., which is leading the project. Still, ''the owners are not prepared to commit to US$60 million dollars until the sales contracts are signed.'' The pipeline partners such as Oil Search Ltd., the largest holder of oil and gas reserves in Papua New Guinea, said in April they hoped to sign contracts with customers in Queensland within three months. With customers signed up, building work will begin to enable gas to be piped by mid-2002. Mineral-rich Papua New Guinea, a developing nation of four million people, has long been searching for a solution on how to develop profitably its gas reserves that far outweigh local demand. The pipeline will bring the gas 2,500 kilometers from Papua New Guinea's Highlands region to Gladstone on Queensland's central coast. The partners achieved a breakthrough in April when Exxon Corp. agreed to supply its 47.5 percent share of the more than 5 trillion cubic feet of gas in the Hides field to Oil Search. Oil Search owns 27.5 percent of Hides, while Santos Ltd., the third-largest Australian-based oil and gas company, owns 25 percent. Project Delays The reserves will come from Hides and from Kutubu, Papua New Guinea's largest oil field, which contains more than 1 trillion cubic feet of gas. Progress on the pipeline project was delayed for months as Chevron and Exxon argued about how to combine the Kutubu and Hides gas reserves into one joint venture. In April, when the impasse was settled, the partners also brought in Australian Gas Light Co., the country's oldest energy utility, to negotiate with potential customers. AGL, along with Petroliam Nasional Berhad, or Petronas, the Malaysian state oil company, will build the A$1.5 billion section of the pipeline down the Queensland coast. Many of the likely buyers, including Comalco, are being represented by Allgas Energy Ltd., a unit of Energex Ltd., a gas and electricity utility owned by the Queensland state government. Comalco would use the gas at its proposed A$1.4 billion alumina refinery at Gladstone. The refinery would use 27 petajoules of gas per year -- about one-quarter of the demand required to start building the pipeline.