Australia to start Timor Gap project

Australia to start Timor Gap project

Agence France-Presse, Darwin, Australia

Work will begin immediately on a huge gas project in
Australia's tropical north after the A$2.3 billion (US$1.53
billion) Bayu-Undan development cleared its final hurdle, the
project developers said on Sunday.

International oil giant ConocoPhillips announced that it is
ready to begin work on the three million-ton per year Liquefied
Natural Gas (LNG) plant in Darwin, after receiving final approval
from the project's major players.

ConocoPhillips is to build a pipeline from its Bayu-Undan gas
field, about 500 kilometers (310 miles) northwest of Darwin in
the Timor Sea, to the Darwin facility, which will supply Japanese
customers with LNG for 17 years from 2006.

The Bayu-Undan gas field is estimated to contain a massive 400
million barrels of condensate and liquefied petroleum gas and 3.4
trillion cubic feet of natural gas.

East Timor's 90 percent share of revenues from the operation
is expected to help lift the embryonic nation from poverty,
reaping an estimated $3 billion in revenue from the project over
the next 20 years.

"This landmark approval by the Timor Sea Designated Authority
marks a significant event for the further development of reserves
in the Timor Sea area," ConocoPhillips president Stephen Brand
said.

Although Australia will receive only 10 percent of revenues
from the field, it will benefit through increased economic
activity and new jobs.

The Northern Territory government has estimated 1,000 jobs
will be created during the three-year plant construction phase,
with 100 workers needed for the plant's operation.

Darwin will also become the major service and supply hub for
the plant and pipeline.

The Bayu-Undan field is in the Joint Petroleum Development
Area, with production revenue going 90 percent to East Timor and
10 percent to Australia.

John Ellice-Flint, chief executive officer of Santos which
holds an 11.8 percent stake in the project, said the final
approvals cleared the way for Santos to make its first entry into
the global LNG market.

"This is a significant milestone for Santos and establishes
LNG as a new cornerstone contributor to group revenue and
earnings," he said.

"The approval also signals the start of an additional gas
business for Santos in the Northern Territory and South East
Asia."

Santos said the combined liquids and LNG project would add
over six million barrels of oil equivalent at peak production --
equal to about 10 percent of Santos' 2002 production.