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woodside petroleum gas deal timor sea

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    DARWIN, June 6 AAP - Woodside Petroleum Ltd has snared a multi-million dollar deal to supply Timor Sea gas to Alcan's proposed $1.5 billion expansion in the Northern Territory. Woodside beat rivals Santos and the PNG Gas consortium for the project, with analysts saying the $6 billion PNG project was fast running out of potential customers. Shares in PNG Gas partner Oil Search fell nearly seven per cent today, as its rival Woodside signed a conditional heads of agreement to supply Alcan with 40 petajoules annually for 20 years. The gas will come from the $500 million development of the Blacktip gas field in the Bonaparte Gulf in Western Australia, which Woodside owns with Italian energy giant Eni Group. It will be transported along a $500 million, 1,000km pipeline to Gove in the NT, to supply Canadian aluminium giant Alcan's proposed alumina refinery expansion from 2007. The deal is conditional on the successful conclusion of a deal to transport the gas, and each party making a final investment decision, along with regulatory approval. One analyst said the deal made it potentially harder for the PNG gas partners to get their operation off the ground. "It's getting harder and harder by the day as they lose major potential customers," he said. "We think there's probably some unsatisfied customers, (but) it's just looking more and more difficult to get the critical mass at the moment. The PNG pipeline project has customers committed to 60-75 petajoules of gas per year, but needs a commitment of 100-150 petajoules to proceed to the Front End Engineering Design stage of the project. Comment was being sought from Oil Search. Meanwhile, Alcan said its feasibility study into its proposed Gove expansion - which will increase the refinery's capacity from two million tonnes to 3.5 million tonnes per year - is due to be completed by mid-2004. Alcan president bauxite and alumina operations, Australia, Richard Yank said securing a "viable, economic sustainable source of energy" had been a top priority for the company. He said the feasibility study had so far uncovered no surprises. "(But) it is still a number of months before we can give any firmer indication (of whether it will go ahead)." Meanwhile, Santos, which owns the nearby Petrel-Tern fields, welcomed any further development of the NT gas market. "Petrel-Tern is a well established field with a lot of gas," Santos general manager business development Graeme Bethune said. "The best thing that can happen is that the gas market grows in the NT, and so I'm sure that there will certainly still be potential to commercialise Petrel-Tern." NT Chief Minister Clare Martin said the Woodside deal would create 1700 new jobs, and was another step in the push to have the Timor Sea recognised as an international gas hub. The deal comes as players in the multi-billion Bayu Undan gas development, also in the Timor Sea, prepare to start work on construction of a
 
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