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how much gas is required for feed, page-3

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    The following from Bloomberg.....

    Exxon Mobil Says Energex Agrees to Buy PNG Gas (Update2)
    July 8 (Bloomberg) -- Exxon Mobil Corp. said the partners in the planned Papua New Guinea natural gas pipeline to Australia signed an initial sales agreement with a Queensland-based gas retailer, taking the $3.5 billion project closer to development.

    Energex Ltd., owned by the Queensland state government, agreed to buy 480 to 1,200 petajoules (425 to 1,062 billion cubic feet) of gas during 20 years from about 2007, Exxon Mobil said in a statement. Energex will sell the gas to customers including Comalco Ltd., which is building a new alumina refinery at Gladstone, Queensland, Exxon said.

    ``If this project had missed out on Comalco and Energex it would have a major problem,'' Energex Chief Executive Greg Maddock said in an interview. ``Having secured this agreement with Comalco, and with Energex, it's got a chance.''

    The project partners, including Oil Search Ltd., have been seeking more customers in Australia to allow the 4,000-kilometer (2,750-mile) pipeline to proceed. Last week they signed a new agreement for the marketing of the fuel after ChevronTexaco Corp., left the group.

    Shares in Oil Search, which owns 51.4 percent of the pipeline project, rose as much as 5 cents, or 6 percent, to 88 cents on the Australian Stock Exchange at 11:41 a.m. Sydney time.

    The pipeline needs buyers for 100 to 150 petajoules a year of gas to proceed with initial engineering. The previous project group had signed provisional agreements with three customers, CS Energy Ltd., TXU Corp.'s Australian unit and M.I.M. Holdings Ltd. for as much as 75 petajoules a year of gas in total.

    2007 Gas?

    The project partners still need more customers before they can start engineering design work, said Anna Schulze, a spokeswoman for Exxon Mobil in Australia. ``At this stage first gas in 2007 is still a possibility,'' she said.

    The partners also include MRDC, representing some Papua New Guinean landowners, and Mitsubishi Corp.'s Japan PNG Petroleum.

    ``Marketing efforts continue with other potential customers in the Northern Territory, Queensland and southern states to secure sufficient commitments to facilitate the project moving to the next phase of development,'' Rob Franklin, vice-president, new business development, Exxon Mobil Gas and Power Marketing, said in the statement e-mailed to Bloomberg News.

    Energex expects to decide on exactly how much gas it will buy from the pipeline project before it signs a final gas sales agreement, Maddock said. Comalco, which is owned by Rio Tinto Group, has agreed to take ``most of the load'' and Energex is talking to other industrial customers which may buy Papua New Guinea gas, he said.

    ``We've always wanted competition on gas, different sources of gas, at a price that was competitive,'' Maddock said. ``We've got to sell this stuff to other people so it all comes back to us being able to get it at a sharp enough price.''

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