Following last week's withdrawal of Methanex's billion dollar methanol development the future of the Burrup industrial development was looking flat and the finger pointing between State and Federal governments over funding turning into a frenzy.
However, the decision by the Federal Government to provide support for vital common use infrastructure for the region to the value of $35.4million was a turning point in the peninsula's fortunes.
GTL CEO Michael Fox, while declining to comment on the Methanex withdrawal, told EnergyReview that the government's commitment was an extremely valuable infrastructure support package and was a factor in the company's decision to commit to the plant.
The GTL project will create 600 jobs during construction and 85 once operational, with production and exports expected to worth up to $350 million per year.
The infrastructure development to support GTL and any future projects will include a seawater supply pipeline, a desalination plant, electricity connection and a contribution towards port services.
Fox confirmed that on offtake agreement for 100% of the plant's product had been signed with oil giant Vitol for the next 15 years after Vitol took a 6% equity in the project, similar to the NWS LNG marketing agreement with China.
Construction is expected to begin in Q1 2004. Once operational the GTL project will be one of WA's top ten exporters.
Just under two weeks ago Methanex threw a cloud over the peninsula's future by announcing that it would not proceed with a 1.3 million tonne per year methanol plant, citing rising capital costs that would limit any returns.
Methanex had already slashed the size of the project in June due to the climbing Australian dollar and its impact on the project economics.
The move led to a desperate scramble by the contracted gas supplier, the NWS venture, which was forced to revise its original gas supply deal for 200 terajoules of gas a day for 25 years with an agreement to supply 100 terajoules a day for 20 years.
Of the eight major projects slated for the Burrup in the past two years three have fallen over, one is in serious doubt, one is edging forward and two remain in the early stages.
Only one, the $645 million Indian-backed Burrup Fertilisers, is under construction and on track for completion in July 2005.
Several hundred million dollars has been spent in developing suitable infrastructure on the peninsula, which has been promoted as a prime location for petrochemical processing projects due to its proximity to Australia's largest gas fields.
But the projects have faced delays in the approvals process, land access issues, debate between State and Federal governments over infrastructure funding, tax treatment for major projects, cost of construction labour and most recently the appreciating Australian dollar.
