|Subject: RT: BHP exit should speed Bayu-Undan
Date: Sat, 17 Apr 1999 08:42:18 -0400
From: "John M. Miller" <firstname.lastname@example.org>
Tuesday April 13, 6:22 am Eastern Time
BHP exit should speed Bayu-Undan progress
By Sonali Paul
MELBOURNE, April 13 (Reuters) - The Broken Hill Pty Co Ltd's sale of its stakes in oil and gas fields in the Timor Sea should speed the development of condensate and gas from the Bayu-Undan field, BHP's ex-partners said on Tuesday.
BHP Petroleum, which had long been seen as an obstacle to the development, sold its 23 percent interest in the field to partner Phillips Petroleum Co (NYSE:P - news), giving Phillips close to a 51 percent overall stake.
``We are confident that a majority of the Bayu-Undan participants are prepared to move ahead expeditiously,'' said Phillips Darwin area manager Jim Godlove.
``Consequently we don't feel there will be any impediment to us moving ahead quickly on this project,'' he told Reuters from Darwin.
The US$1.5 billion first stage of development would involve producing liquids -- condensate and liquefied petroleum gas -- which Phillips hopes to bring on stream in late 2002 or 2003.
``With Phillips now owning in the order of 50 percent of the project and recognising their goals for the future and enthusiasm for the project, I think now it will move ahead quite speedily,'' said Rod Brown, managing director of Petroz NL , which has a nine percent stake in Bayu-Undan.
The companies had hoped to secure approvals for the project by April 1, but the main issue that needs to be resolved before developing the field, which lies between Indonesia and Australia, is Indonesia's taxation of the output.
``It is our hope those issues will be resolved in a matter of months,'' said Godlove.
``At this point in time we are encouraged that the interpretations (of Indonesian tax statutes) will produce favourable outcomes in terms of ensuring acceptable economic returns,'' he said.
He added both governments considered Bayu-Undan, with reserves of 400 million barrels of liquids and 3.1 trillion cubic feet of gas, a high priority project.
But BHP Petroleum was not confident enough about the potential outcome of the Indonesian decision to submit the development plan to its board for approval.
``We didn't think it was prudent to put a development proposal for a project to our board until all of the appropriate fiscal settings had been clarified,'' said BHP Petroleum spokesman Robert Porter.
Godlove said Phillips was closely monitoring political developments in East Timor, which would claim sovereignty over Bayu-Undan if it were independent of Indonesia, but did not see changes stemming from a planned East Timor referendum on independence threatening the project.
``East Timor presents a set of political risks. We don't believe those risks are unacceptable or unmanageable,'' he said.
For stage two, developing gas with the help of a US$500 million pipeline, the partners had already found potential customers in the Northern Territory, where the gas would land, for about 50-70 petajoules a year of gas, Godlove said.
BHP and Phillips had been at loggerheads over how to develop gas for liquefied natural gas (LNG) from the project, with BHP pressing to build an offshore LNG plant using new technology, while Phillips sought to build a plant at Darwin.
The LNG plans have been put on hold with the Asian LNG market depressed.
``But we do believe that we will be positioning Bayu-Undan to take advantage of that market as soon as it does recover,'' Godlove said.
Bayu-Undan covers two permits in the Australia-Indonesia Zone of Cooperation in the Timor Sea -- ZOCA 91-12 and ZOCA 91-13.
Besides Phillips, the participants in ZOCA 91-12 are Santos Ltd with 21.246 percent, Inpex Sahul Ltd with 21.209 percent and Petroz with 14.948 percent.
In ZOCA 91-13, the other stakeholders are Kerr-McGee Corp (NYSE:KMG - news) unit Oryx Energy Co with 25 percent and British-Borneo Oil & Gas Plc (quote from Yahoo! UK & Ireland: BBOR.L) with 15 percent.