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

To: Tomas who wrote (1006)	4/14/1999 9:46:00 AM
From: Tomas	Read Replies (1) \| Respond to of 2742

PNG: "Large enough customer base for the project to go ahead with or without Comalco" Gas agreement puts pressure on Comalco By Diana Taylor BRISBANE, April 14 (Reuters) - Comalco Ltd came under pressure on Wednesday to decide whether to build a A$1.2 billion alumina refinery in Queensland or in Sarawak, Malaysia after an agreement which guarantees gas supply from Papua New Guinea gas fields. The deal allows Exxon Corp to release gas from its Hides gas field through Oil Search Ltd to be integrated with gas from the Kutubu field, operated by Chevron Corp. The integration guarantees a 30-year supply of gas estimated to be about 4,500 petajoules and opens the way for the construction of a A$5.5 billion PNG to Queensland pipeline. The pipeline will be operated jointly by Malaysia's Petronas and the Australian Gas Light Co . Uncertainty of supply has been cited by Comalco as a major hurdle in building the refinery in the Queensland city of Gladstone. ''Clearly customers have not been in a position to fully commit to the project and to fully commit to gas sales agreements,'' Chevron's project director John Powell told a news conference. "The fact that ample reserves are now available removes any doubt that customers might have about the viability this project. "Over the next two to three months we will be actively pursuing customers to ensure we have bank book documents in place around the middle of the year. "We've been talking to customers now for the best part of 24 or 36 months and we've got substantial documents already in place with customers in terms of memorandums of understanding. ''There are no longer any rocks for customers to hide behind.'' The Queensland government, which has offered Comalco $100 million of infrastructure incentives, said Comalco should now make a decision on the placement of its refinery. ''It is now time for (Comalco) to make its intentions crystal clear on whether or not it will go ahead with the plant in Australia,'' state deputy premier Jim Elder said in a statement. ''Comalco has been exploring the possibility of a greenfield alumina refinery in Australia for more than 20 years and time is running out if they are to develop a new refinery and avail themselves to the support offered by governments.'' But Comalco said although they welcomed the new arrangements, there were still many issues to be resolved including gas price and financial details in PNG. ''We still haven't seen details of the levels of reserves available,'' Comalco's external affairs general manager Geoffrey Ewing told Reuters. "We need 27 petajoules per annum to run the first stage of the refinery and for stages two and three there are significantly larger quantities needed and this is over a period of 30 years. ''Also, I don't believe that every element of the financial arrangements for the pipeline in Papua New Guinea has been put to bed.'' Ewing said costs of transporting bauxite from its mine in northern Australia to the refinery was also an issue for Comalco. ''It is not self-evident that it is cheaper to transport bauxite from Weipa to Gladstone just because the distance is less than transporting it to Malaysia,'' Ewing said. Sponsors of the pipeline said the project did not hinge on Comalco building its alumina refinery in the Queensland city of Gladstone but said Comalco would represent about 20 percent of the total gas market. ''We believe there is a large enough customer base for the project to go ahead with or without Comalco,'' said Peter Botten, managing director of Oil Search Ltd which represents Exxon in the marketplace. ''We'd certainly like to have them on board but at this stage we don't think they are pivotal to the project.'' Botten said sponsors hoped to sign up a mix of electricity and industrial customers. ''That provides a good risk balance for us and a reasonable return for us. There is no doubt there is a requirement to pick up a substantial component of gas through electricity -- Comalco is not as important as that,'' Botten told Reuters after the news conference. biz.yahoo.com