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To: Tomas who wrote (917)	2/1/1999 10:24:00 PM
From: Tomas	Respond to of 2742

Interesting article in Sydney Morning Herald: Santos buys into PNG gas pipeline! Sydney Morning Herald 02/02/99 By KATE ASKEW - Resources Writer Santos buys into Hides and PNG gas pipeline Santos has moved to shore up its position in the Queensland gas market through the acquisition of gas reserves in Papua New Guinea, paying as much as $US90 million for a 9 per cent stake in the proposed $US3.5 billion PNG-to-Queensland gas pipeline. The deal, which involves the acquisition of 25 per cent of the Hides gasfield from Oil Search, is the final piece in Oil Search's $US400 million ($634 million) acquisition of British Petroleum's PNG assets. Oil Search made the acquisition intending to on-sell some of BP's assets. The Port Moresby based company, which maintains the lion's share of the pipeline reserves with about 25 per cent, also confirmed yesterday it had completed a $US245 million refinancing into long-term corporate debt which, along with the sale of Hides gas to Santos, paves the way for the integration of Hides gas into the pipeline project. Oil Search shares, which have gained 13 per cent in the past week, rose 2c to $1.75 yesterday. Santos fell 2c to $4.61. While the integration of Hides has been agreed in principle, the major partner, Exxon, with 47.5 per cent, is understood to have been stalling until Oil Search had been completed its negotiations. Adelaide-based Santos' endorsement of the pipeline project, along with the level of interest showed by Woodside Petroleum in the assets, comes as negotiations continue between the pipeline sponsors and its key potential customer Comalco. Last week the Federal Government announced a $100-million support package for Comalco's proposed alumina refinery at Gladstone. Comalco has said it would not commit to a formal gas sales contract until the Hides integration was completed. Santos was in danger of being priced out of the Queensland gas market. Stockbroking analysts estimated PNG gas could be delivered to foundation customers for about $2 a gigajoule, less than half the cost of buying gas from Santos. Some market watchers believe there is less likelihood of Hides gas being sold into the pipeline in the long term, given the discovery of gas this month in the foreland region of PNG. The Kimu-1 discovery, will be closer to the offshore pipeline and carries less risk than Kutubu and Hides gas in the highlands of PNG. Nevertheless, Hides gas is needed in the short term to underpin reserves for the pipeline project in order to convince customers to sign sales contracts. smh.com.au

To: Tomas who wrote (917)	2/2/1999 7:51:00 PM
From: Tomas	Read Replies (1) \| Respond to of 2742

Papua New Guinea: Energy Minister Namaliu backs Hides deal with Santos The National, February 3 PORT MORESBY: Petroleum and Energy Minister Sir Rabbie Namaliu yesterday welcomed the acquisition by Santos Ltd of a 25 per cent stake in the Hides gas field as a strong vote of confidence in the future of the gas industry in PNG as well as in the PNG to Queensland gas project. Sir Rabbie said Oil Search which sold the stake in a K191 million deal, had briefed him on its decision to sell the equity in Hides and he fully appreciated the reasons for the sale. "Oil Search will be retaining a 27 per cent stake in Hides, and will maintain its 100 per cent ownership of the Hides Gas to Electricity project," he said. Sir Rabbie said Santos, a major gas producer in Australia, had given the pipeline project its strongest possible endorsement by its investment in Hides. "This confirms that another leading Australian resource company has confidence in the pipeline project, and the oil and gas industries in PNG," he said. wr.com.au _____________________________________________ Furor erupts over decision to sell gas stake to Santos PostCourier, February 3 Govt will back Hides changes OIL Search's plans to sell a 25 per cent stake in Hides gas field to Santos Limited is the centre of a political storm, just a day after the deal was announced. While the Government fully welcomed and endorsed the sale, a strong political lobby group said it was not in the national interest and should not be entertained (see separate story). In a statement issued yesterday, Prime Minister Bill Skate described the deal as a ''smart business move'' by Oil Search and a vote of confidence by Santos in the PNG economy. Petroleum and Energy Minister Sir Rabbie Namaliu also backed the deal, and said he appreciated the reasons for the sale. Oil Search announced on Monday it would sell a 25 per cent stake in Hides to Santos for up to $A142 million (K192 million). Mr Skate said while he was aware of criticism by Southern Highlands Governor Anderson Agiru and local member Alfred Kaiabe, he believed the move by Oil Search would minimise its exposure and reduce the need for overseas borrowings to fund future gas developments. This would have a positive impact on the economy, he said. ''Oil Search is still firmly in control of its investment in this nation and this move could be reasonably expected following the substantial cost of Oil Search's acquisition of British Petroleum's interest in the gas field last year,'' Mr Skate said. According to Sir Rabbie, principals of Oil Search had briefed him on the decision to sell the Hides equity to Santos. ''Oil Search will be retaining a 27 per cent stake in Hides, and will maintain its 100 per cent ownership of the Hides gas to electricity project,'' he said. Sir Rabbie said Oil Search would continue to be the largest stake holder in the PNG to Queensland pipeline project, and Santos' acquisition had given the gas pipeline project the strongest possible endorsement. ''Santos is already a major operator in the oil and gas industry in Australia, and its involvement in the pipeline project through its equity in Hides Gas certainly confirms that another leading Australian resource company has confidence in the pipeline project, and the oil gas industries in Papua New Guinea,'' Sir Rabbie said. ''I remain totally confident that the pipeline project the largest and most significant infra structure project in our history will proceed, and these developments only strengthen my confidence.'' postcourier.com.pg