Esso Highlands Limited - a subsidiary of ExxonMobil and operator of the PNG Gas Project - has announced the signing of a conditional agreement between the Gas Project participants and Alcan Gove Pty Ltd. The deal covers the sale of 43.5 petajopules per year of gas for 20 years to the Gove alumina refinery.
Oil Search managing director Peter Botten said his company was delighted that Alcan had committed to purchase substantial volumes of gas from the PNG Gas Project.
"This agreement vindicates our belief that the move into front-end engineering and design would help to crystallise new gas sales," Botten said.
"With intensive discussions continuing with a number of other potential customers, significant progress is being made towards enabling a project sanction decision following the completion of FEED.”
Alcan terminated its deal with the Blacktip joint venture - comprising Woodside Energy Ltd and Eni Australia - following a request for 30% price increase on the gas to be delivered.
Reports suggest that the Blacktip partners were trying to pass on blowouts in labour and steel costs.
Alcan and the Blacktip joint venturers agreed in November 2004 on the sale and purchase of 800PJ of gas from the Blacktip field in the offshore Bonaparte Gulf over about 20 years from 2007.
“We are extremely disappointed by the actions of Blacktip as we are aware of the impact of this change on a number of stakeholders,” said Alcan Bauxite and Alumina president of Pacific Operations Richard Yank.
“We negotiated in good faith to find a viable solution for both parties but the cost increase was unacceptable."
The termination of the contract created doubt over the future of the 940km Trans Territory Pipeline, which was intended to bring gas to Gove from the west.
A pipeline intended to connect to the planned PNG-to-Brisbane pipeline would run east, killing off the original pipeline entirely.
In March, an Australian Pipeline Trust-ANZ Banking Group consortium was named preferred bidder to build, own and operate the Trans-Territory pipeline.
Interests in Blacktip are Woodside Energy (operator) 53.85% and Eni Australia 46.15%.
