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To: Henrik who wrote (83365)	1/4/2001 2:47:49 AM
From: Henrik	Respond to of 95453

Tomas, Re.: LOILY - pipeline from Papua New Guinea to Queensland, Australia QNI said no threat to PNG-Australia gas line 17:49, Thursday, 4 January 2001 By Sonali Paul MELBOURNE, Jan 4 (Reuters) Chevron, the project leader of the proposed US$3.5 billion PNG to Australia gas pipeline, remained confident on Thursday that the pipeline would go ahead despite the prospect of losing a potential big customer. John Powell, the PNG gas project leader for Chevron Corp , said the pipeline was still on track to start delivering gas from PNG to Queensland by late 2004 or 2005, with or without QNI Ltd, the Australian arm of Billiton Plc. QNI said it was still considering a A$310 million extension of its Yabulu nickel refinery near Townsville but if the extension involved using gas, it would need the gas in 2003. "Should we elect to proceed with the Yabulu extension project and if gas is to be considered, it would need to be available by mid-2003," a QNI spokeswoman said on Thursday. She issued the statement after the Courier Mail newspaper in Queensland reported that QNI might not use PNG gas for its refinery extension because the gas would not be available until 2004 or 2005. QNI would need about 20 billion cubic feet a year of gas or about 55 million cubic feet a day from the pipeline. Powell said QNI would represent about five percent of the pipeline's gas. "They're a very valuable customer, and we obviously like them in our customer base. We're confident they will be there, but if they're not a part of the initial equation, the project will continue to go forward," Powell told Reuters. NEW POWER STATION QNI is looking to convert its existing power and process operations to gas or take supply of gas-fired steam and power from a new 360 megawatt power plant which the Queensland government committed last year to build by 2003 to bring cheaper power to northern Queensland and promote cleaner energy. But if gas was not available in time, QNI said it would use a mix of coal, naphtha and fuel oil in the extension as it uses for its existing operation. "QNI has the potential to be a major foundation customer for bringing gas to north Queensland, but we can only consider gas if we are not economically disadvantaged," the spokeswoman said. The Queensland government, a strong promoter of the PNG gas pipeline, is negotiating with two bidders -- state-owned Stanwell Corp and Enertrade -- to build the new power station. "We got a note back from (the Department of) State Development indicating they would continue negotiations early in the New Year and I expect those negotiations to recommence next Monday or Tuesday," said Enertrade's manager of business development, Bill Glyde. PIPELINE ON TRACK Another potential anchor customer for the pipeline, Rio Tinto's Comalco Ltd unit, has yet to decide whether to go ahead with building a proposed A$1.4 billion alumina refinery in Gladstone. "The proposal has to go to the Rio Tinto board and be considered ... It is likely to be this quarter," said a Comalco spokesman, adding that a feasibility study which had been slated for completion by the end of 2000 was nearly finished. Powell said he expected Comalco, which would take 10 to 15 percent of the pipeline's gas, to sign up as a customer. "We're very confident that like QNI they will be part of our customer base," he said. The pipeline would deliver gas from the Kutubu gas field, majority owned by Chevron, and the larger Hides gas field, largely owned by Exxon Mobil Corp, in the Southern Highlands of PNG through the Coral Sea to eastern Australia. Amid the delays to signing up customers, the project is now running into potential competition from Timor Sea gas. Enertrade expected to be able to make a decision on a gas source for the new Townsville power station by the second quarter of 2001. "Enertrade has a very open mind. We will take the best commercial deal," Glyde said, when asked whether the new power station would be fuelled by gas from PNG or the Timor Sea. (c) Reuters Limited 2001 REUTER NEWS SERVICE Copyright