Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Tomas who wrote (1562)	3/31/2000 5:23:00 PM
From: Tomas	Read Replies (1) \| Respond to of 2742

PNG-Queensland gas pipeline: Comalco Set for Monday Refinery Decision By Diana Taylor SYDNEY, Mar 31 (Reuters) - Comalco Ltd is expected to announce on Monday that it has chosen the Queensland coastal city of Gladstone as the site of its A$1.4 billion (US$840 million) alumina refinery, market sources said. Comalco managing director Terry Palmer last week told journalists that Gladstone was "clearly right in the hunt" as the favoured site against an alternative location in the Malaysian state of Sarawak. Analysts who have considered the financials of placing the refinery in both sites say Gladstone is a hands-down winner. Benefits from Australia include a A$250 million federal and state government funding package, as well as a stable political climate and access to an educated workforce. "We are confident they will choose Gladstone," Brisbane-based HTM Wilson analyst Andrew Williams told Reuters. "The incentives on the table from both the federal and state government and our internal number crunching would suggest the pendulum will swing in favour of Gladstone. "The labour might be cheaper in Southeast Asia but there is more sovereign risk and there are still lots of other problems." The implications of Comalco choosing Gladstone are enormous for industrial development in the economically robust state of Queensland and for the future of a A$3.5 billion Papua New Guinea to Gladstone pipeline development. KEY DECISION FOR PIPELINE "The Comalco decision will be a litmus test for the future of the pipeline," Williams said. "Because if Rio Tinto/Comalco is not prepared to take a risk on the pipeline you could forgive a lot of companies for not coming on. It is tacit approval of the pipeline." Rio owns 72 percent of Comalco and plans a mop-up bid for the Brisbane-based company, which has mining and smelting operations in Australia and New Zealand. Williams said the pipeline project, which is still working out its supply agreement with gas field owners including oil major Exxon Corp , needs a positive Comalco decision. "It needs a catalyst, it needs someone somewhere to put their hand up rather than all this rhetoric," he said. "The effect of Comalco actually saying Gladstone will be greater than just the 25 petajoules the refinery will take in gas." Other market sources said Comalco may also be lured to Queensland with a discount gas price from the pipeline project. The Gladstone gate-landed price believed to be around A$2.67 a gigajoule but sources said Comalco would be looking at a price between A$2.00 and A$2.40. "There will be a preferential price offered to Comalco and the numbers will stack up in favour of Gladstone. If they can get gas 40 cents cheaper it may be enough to swing them." Comalco said the delay in the decision has been driven by the search for alternative supplies of gas, because of the difficulties surrounding the PNG pipeline project. Under consideration is coal seam methane gas from the central Queensland coal fields but Palmer said this will not meet the total needs of the refinery for its expected 30 year life span. Whatever the decision, Comalco acknowledges that once made it will be locked-in and unable to easily switch allegiances. Waiting in the wings are two national governments, two state governments, a handful of industrial companies and the pipeline proponents. "There's a lot riding on this decision," Williams said. slb.com