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

To: Tomas who wrote (985)	4/7/1999 1:41:00 PM
From: Tomas	Read Replies (1) \| Respond to of 2742

Papua New Guinea - Queensland gas pipeline: Continued stalemate Santos' Adler Says PNG Gas Plan Still 50-50: Bloomberg Forum Brisbane, Australia, April 7 (Bloomberg) -- Santos Ltd. Managing Director Ross Adler said there's still only a 50 percent chance the US$3.5 billion plan to pipe natural gas from Papua New Guinea to Australia will go ahead. The project to build a 2,500 kilometer pipeline from Papua New Guinea's highlands to Australia's Queensland state has yet to sign any firm contracts with customers to take the gas. Still, Adler said Santos, the third-largest Australian- based oil and gas company was right to pay US$55 million this year for one-quarter of Hides, Papua New Guinea's largest gas field, even if it takes a decade to develop. ''If we were to spend US$55 million on exploration in New Guinea, which would not be very hard, you wouldn't get development for five to 10 years in any event,'' Adler told the Bloomberg Forum. ''It's simply buying a resource instead of discovering it through the drill bit.'' Chevron Corp., Oil Search Ltd. and other partners in the pipeline project said earlier this year that delays in securing enough gas reserves will probably push completion beyond the original target of late 2001. The pipeline sponsors are still talking to Exxon Corp., holder of 47.5 percent of Hides, about using its gas for the project. If the pipeline is delayed for too long, then the Queensland state government or private companies may build coal-fired electricity plants, instead of generators using Papua New Guinea gas, threatening the viability of the PNG project. ''I still think it's probably 50-50'' whether the project will go ahead, said Adler. Santos agreed in February to pay US$55 million to Oil Search, the largest holder of oil and gas reserves in Papua New Guinea, for one-quarter of Hides, and as much as US$35 million more when the pipeline goes ahead. ''Our people believe that there could be more than 5 trillion cubic feet'' in Hides, said Adler. ''It's one of the great gas resources in this region of the world. It will be developed some day.''