QLD: Pipeline could go ahead without Comalco says director

AAP General News (Australia)
04-14-1999
QLD: Pipeline could go ahead without Comalco says director

BRISBANE, April 14 AAP - A $5.5 billion gas pipeline from Papua New Guinea to Queensland
could still go ahead without aluminium company Comalco as its first major customer, the
pipeline's project director said today.

Oil exploration company Oil Search announced today it had signed an agreement with United
States-based energy giant Exxon Corp to enable adequate reserves for the pipeline project, if
there was agreement on appropriate commercial terms for gas contracts.

The pipeline's project director Dr John Powell said today the agreement removed a major
obstacle to the pipeline going ahead.

"Our view is that the customer base is sufficient enough, if Comalco decided to go
somewhere else, we can do it without them," Dr Powell said today.

Comalco is considering a site in Gladstone, on the central Queensland coast, but is also
considering Malaysia for a proposed $1.4 billion alumina refinery.

The company has said that guaranteeing reserves and fixing the gas price were two of the
major issues which needed to be resolved before it could consider a full feasibility study
into the Gladstone site.

Queensland Premier Peter Beattie said today the completion of an agreement which secured
gas reserves from Oil Search, Exxon and Chevron resolved the issue of critical gas supply and
that the pipeline could be up and running by the beginning of 2002.

"This essentially is the clearing of one of the last major stumbling blocks in relation to
the PNG gas project and the road is now clear for all potential customers to sit down and
finalise their gas supply requirements," Mr Beattie said.

Capital investment was expected to reach $8.1 billion by 2010.

"The PNG gas project has the potential to make a quantum boost to the industrial
development of Queensland by providing abundant and competitively priced energy, especially to
north Queensland," Mr Beattie said.

Opposition leader Rob Borbidge said the gas deal was one of the best signals yet the
pipeline would become a reality.

"It would be extraordinary if this development did not lead quite quickly to sufficient
firm contracts for gas to get a project start date for this incredibly exciting project," Mr
Borbidge said.

Federal Minister for Industry, Science and Resources, Senator Nick Minchin also welcomed
news of the gas deal, saying that the pipeline would support a number of major development
projects in north and central Queensland.

During construction, employment in the pipeline and associated industries was expected to
generate around 5,000 jobs, Senator Minchin said.

Total regional employment from the pipeline and associated industries would create an
estimated 2,500 jobs.

In January this year, the federal government announced it would offer a $100 million
incentive package to Comalco to lure the project to Gladstone.

AAP rad/sd/jnb/d

KEYWORD: CHEVRON NIGHTLEAD

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