The agreement, between the partners of the Highlands Gas Project and the Queensland government-owned Energex, includes gas to be supplied to Energex retail customers, including the new Comalco refinery, currently under construction at Gladstone.
The supply covers a period of 20 years from approximately 2007, with total quantities to be between 480 and 1200 petajoules over that period. While the quantity is well short of the demand needed to make the pipeline viable, the partners are buoyed by signing the highly contested and lucrative Alcoa contract.
"Oil Search is delighted that Energex/Comalco have committed to purchase substantial volumes of gas from the Highlands Gas Project, which is operating under the terms of the new Heads of Agreement agreed to last week," said Peter Botten, managing director of Oil Search.
"Intensive discussions are continuing with a number of other potential customers. The outcome of these marketing efforts will play an important role in the Joint Venture's decision whether to move the Project to the next stage of development activities, Front End Engineering and Design (FEED).
"Oil Search will continue to pursue all options to commercialise its substantial PNG gas resource. "
Rob Franklin, vice president, new business development, ExxonMobil Gas and Power Marketing said the agreement improves the likelihood of a gas pipeline servicing the east-coast of Queensland.
"Marketing efforts continue with other potential customers in the Northern Territory, Queensland and southern states to secure sufficient commitments," said Franklin.
Oil Search shares have risen slightly on the news, moving up 5% at the time of printing.
