Media Reports on Bayu-Undan Development

The following articles are contained in this file. Click on a title to read one.

Bayu-Undan A Rare Gem

Australian Financial Review, June 2, 2003
By Ian Howarth

Woodside Petroleum's enthusiasm for a merger/acquisition deal to bolster its short-term crude oil or petroleum liquids production has fostered all kinds of speculation.

The latest from the JBWere rumour file is that Woodside might be negotiating to spend $564 million on a 12 per cent stake in the massive Bayu-Undan gas and liquids project being developed in the Timor Sea.

The first stage of the project, which has faced delays because of the resolution of the former Timor treaty with the new state of East Timor, is about 75 per cent complete with the first liquids due to be produced by this time next year.

ConocoPhillips is the operator of the project and holds an equity position of 76.2 per cent in the venture, which spreads across two production licence areas.

Italian oil company Agip holds 12 per cent and Santos the remaining 11.8 per cent.

But industry sources discounted the Woodside buy-in on the basis that the Bayu-Undan joint venture has strong pre-emptive rights within the parties. ConocoPhillips has been active in buying out its smaller joint venture partners.

In the past two years it has acquired the interests of BHP Billiton, Petroz, US independent Parker and Parsley as well as engineering group Kerr McGee .

will be the biggest offshore liquid-stripping and gas recycling project ever built. At a cost of $US1.8 billion ($2.7 billion), it is also one of the most complex.

The second phase will involve a 500 kilometre gas pipeline to Darwin where ConocoPhillips will build a liquefied natural gas production plant.

Bayu-Undan contains about 400 million barrels of petroleum liquids and 3.4 trillion cubic feet of natural gas. It lies in 80 metres of water about 500 kilometres north-west of Darwin and 250 kilometres south of Suai in East Timor.

Preliminary LNG sales contracts for 3 million tonnes of LNG a year have been signed with Tokyo Gas and Tokyo Electric.

The only thing holding back confirmation of the LNG side of the project is the resolution of necessary legislation in the East Timorese parliament, a relatively slow process.

ConocoPhillips Awards Bayu-Undan Construction Contracts

By Andrew Trounson, Dow Jones Newswires; June 16 2003

BRISBANE -(Dow Jones)- U.S. oil and gas major ConocoPhillips is moving fast on the development of its US$1.5 billion liquefied natural gas project in Australia's Northern Territory, awarding contracts for the plant and associated pipeline.

Engineering conglomerate Bechtel Corp. will construct the US$1 billion LNG plant to be built in Darwin, while Australia's Multiplex and Italy's Saipem SpA will install the near US$500 million pipeline that will bring in gas from ConocoPhillips' Bayu-Undan fields some 500 kilometers offshore in the Timor Sea.

"Multiplex and Saipem will do the (pipeline) installation," ConocoPhillips' president of its Australian affiliate, Stephen Brand, told reporters in Darwin Monday.

Saipem is a unit of Italy's ENI SpA .

First LNG production from the plant is targeted for early 2006.

ConocoPhillips has a 64.14% stake in Bayu-Undan, with Australia's Santos Ltd. (STOSY) holding 11.83%. The other partners are ENI unit Agip with 12.32% and Japan's Inpex Corp. with 11.71%.

INTERVIEW: East Timor Wants ConocoPhillips Bayu-Undan HQ

Dow Jones Business News, June 16 2003
By Andrew Trounson,

DARWIN -(Dow Jones)- U.S. oil major ConocoPhillips is being lobbied to place in East Timor, or Timor-Leste, the head quarters for its US$1.5 billion Bayu-Undan gas development offshore in the Timor Sea.

"We will invite them to put their headquarters in Timor-Leste for their operations," East Timor's Secretary of State for Investment, Tourism and Environment, Jose Teixeira told Dow Jones Newswires on Monday.

"That would be a tremendous boost for our local economy and we will be actively seeking them to do that," Teixeira said.

The development of Bayu-Undan, offshore of the south of the country in the Timor Sea, is set to provide a massive boost to impoverished East Timor, which has an economy that is largely dependent on aid.

Once production from the liquefied natural gas project starts in 2006, East Timor stands to reap an average US$100 million in annual revenue, more than its current annual budget of US$60 million.

ConocoPhillips' Darwin Vice President Blair Murphy said he wasn't aware of any invitation from East Timor to put the headquarters in Dili.

He noted that ConocoPhillips' regional headquarters is in Perth, Western Australia, which it considers the commercial center for the industry in the region.

Ordinarily, about 200 people work out of the Perth office. However, Murphy said an operating office will be established in Dili but its size has yet to be determined.

ConocoPhillips currently has a helicopter base in East Timor that services the Bayu-Undan fields offshore.

Bayu-Undan is situated in the so-called Joint Petroleum Development Area, or JPDA, of the Timor Sea that is shared been East Timor and Australia.

Under a treaty between the two countries, East Timor is entitled to 90% of the royalties form the area with Australia taking 10%.

While East Timor will earn the lion's share of the revenue, the gas itself is to be piped 500 kilometers to shore in Australia's Northern Territory, which will benefit from the construction of a LNG plant to be built in Darwin.

"We now have the structure for a long-term relationship with the approval of Bayu-Undan, and long term relationships mean that they are to make some commitments to investing as much of their upstream activities as possible in Timor-Leste," East Timor's Teixeira said.

He added the joint fiscal arrangements under the JPDA show that East Timor can offer a stable, investor-friendly regime.

ConocoPhillips "can be confident they can get investment-friendly terms to establish their operations in Timor-Leste," Teixeira said.

The Bayu-Undan joint venturers are ConocoPhillips with 64.14%, Italy's Eni SpA (E) with 12.32%, Australia's Santos Ltd. with 11.83%, and Japan's INPEX with 11.71%.

RPT-UPDATE - Bechtel wins $1 bln Timor Sea contract

June 16, 2003

DARWIN, June 16 (Reuters) - U.S. oil major ConocoPhillips said on Monday it has awarded a $1 billion construction contract for a liquefied natural gas (LNG) plant in northern Australia to privately held Bechtel Corp Inc.

ConocoPhillips announced the final go-ahead for the $1.5 billion Bayu-Undan project in the Timor Sea on Sunday, which will pipe gas 500 km (310 miles) to a plant in Darwin.

"We have awarded the contract to Bechtel and the first LNG cargo is expected in early 2006," Blair Murphy, ConocoPhillips Australia vice-president, told Reuters.

A second contract, worth nearly $500 million, was awarded to a partnership of Multiplex and the Saipem division of Italy-based ENI, said Stephen Brand, ConocoPhillips' president in Australia.

The venture has a deal to supply the entire reserves of the field -- three million tonnes of LNG annually for 17-years -- to Tokyo Gas (TG) and Tokyo Electric Power (TEPCO). The first LNG cargo is scheduled for delivery in early 2006.

Murphy would also not rule the future possibility of processing gas at the Darwin plant from the yet to be developed Sunrise reserves in the Timor Sea, in which ConocoPhillips also has a stake.

Bayu-Undan is operated by ConocoPhillips with a 64.2 percent stake, while the other shareholders are Santos Ltd with 11.8 percent, Japanese energy group INPEX Corp with 11.7 percent and Eni unit Agip with 12.3 percent.

($1=A$1.49)

Yes For Bayu-Undan LNG Project

Sydney Morning Herald, June 16, 2003
By Barry Fitzgerald

The investment boom in the Northern Territory is gathering momentum with the ConocoPhillips-led Bayu-Undan partnership yesterday committing to a $2.24 billion liquefied natural gas export project.

The commitment is in addition to the $2.7 billion already invested by the partners on the liquids (condensate and liquefied petroleum gas) stripping project which starts production early next year.

Project partners Santos is the only local partner put the value of the LNG exports, starting in 2006, and the sale of liquids at more than $30 billion over the next 20 years, of which $6 billion would go to East Timor.

The NT Government has also recently been celebrating plans by Woodside and its partners to spend $1 billion developing the Blacktip gasfield in the Bonaparte Gulf and plans by Alcan to spend $1.5 billion expanding production at the Gove alumina refinery.

The LNG project, which will be managed out of Darwin, will be Australia's second after the Woodside-managed North-West Shelf and is based on Bayu-Undan gas reserves (3.4 trillion cubic feet) in the Timor Sea joint development area between East Timor (90 per cent) and Australia (10 per cent).

The managing director of Santos, John Ellice-Flint, said yesterday Bayu-Undan was "putting the NT back in to Santos" a reference to the group's name being the acronym of South Australian and Northern Territory Oil Search.

"Santos is the only Australian company involved in this world- class project and the final approvals clear the way for the company to make its first entry in the global LNG market," Mr Ellice-Flint said.

He said the combined liquids stripping and LNG projects would add more than six million barrels of annual oil equivalent to the group's output when it reached its peak.

That would equal 10 per cent of the group's 2002 production effort. The go-ahead for the LNG project would also add 46 million barrels of oil equivalent to the group's proven reserves.

Analysts have previously estimated that Santos' interest in Bayu-Undan is worth about 30c a share.

The deal for a 90:10 per cent split of oil and gas royalties in East Timor's favour replaced an early 50:50 per cent split when Indonesia was in charge in Dili.

Despite the more favourable outcome for the tiny new nation, controversy about whether East Timor should have done better still continues.

That is particularly so when the potential royalty stream from other development opportunities in the Timor Sea are taken in to account. The Greater Sunrise gasfield, 450 kilometres north-west of Darwin, and the Laminara/Corallina oilfields further west are examples. Both are closer to East Timor than to Australia and both are claimed by East Timor as offshore territory.

But Australia made it part of the Timor Sea Treaty that in the seas outside the joint development area where both governments claim sovereignty including 80 per cent of Greater Sunrise and all of Laminara Corallina 100 per cent of royalties would flow to Australia.

Bayu-Undan is in 80 metres of water about 250 km south of Suai in East Timor and 500 km north-west of Darwin. Apart from its gas reserves, the 1995 discovery also ranks as one of the biggest liquids discoveries in the region at 400 million barrels of condensate (light oil) and LPG.

Current ownership is ConocoPhillips of the US (operator, with 64.14 per cent), AGIP of Italy (12.32 per cent), Santos (11.83 per cent) and Japan's INPEX (11.71 per cent).

The LNG project is underpinned by a sales agreement with Tokyo Electric Power and Toyko Gas for the annual delivery of three million tonnes of LNG for 17 years, starting early in 2006.

Santos spends $50m on Timor gas project

AAP, June 16 2003

Australian oil and gas major Santos Ltd plans to spend more than $500 million on the landmark Bayu-Undan liquified natural gas (LNG) project in the Timor Sea.

The development cleared the final regulatory hurdle at the weekend, signalling the way for the partners to create Australia's second LNG project, after the North West Shelf off Western Australia.

The operator, global energy major ConocoPhillips, estimates the Bayu-Undan project - 500 kms offshore from Darwin - will generate more than $A30 billion from export customers annually.

If the project goes from first discovery in 1995, to first production of valuable petroleum liquids in 2004 and 2006 for the LNG phase it will be a "world first", according to Santos.

The liquids recycling project was estimated to cost $US1.8 billion and the next phase, the LNG project was anticipated to cost $US1.5 billion after a 3.2 million tonnes per year plant is built in Darwin.

Santos will have to spend more than $500 million for its share in the whole project.

Analysts said there was little or no ramifications for the PNG Gas project given Bayu-Undan was export-related, whereas the long-awaited PNG pipeline hoped to supply domestic Australian customers.

One Sydney-based oil and gas analyst said the regulatory approval cleared the way for the joint venture partners to formalise their sales agreements with their Japanese customers.

All the LNG has been earmarked for Japan, after a heads of agreement was signed with the Tokyo Electric Power Co and Tokyo Gas in March for three million tonnes per annum of LNG from 2006 for 17 years.

The analyst said the project was also totally unrelated to the massive yet undeveloped Greater Sunrise LNG project, also in the Timor Sea.

"Bayu-Undan is a positive for Santos as the only listed Australian joint venture partner although they will have to spend more capital as a result," he said.

"We don't see any major implications at this point for the PNG gas project .. they were aimed at different markets."

While Santos has a 25 per cent interest in the Hides field in PNG, and the company's efforts were currently focused on Bayu-Undan.

Santos business development general manager Graeme Bethune said the Bayu-Undan project marked a "new breed of project" for the company.

"Very importantly we'll be able to book about an additional 47 million barrels of proven reserves onto our books this year, an increase of almost 15 per cent," he told AAP.

Santos diluted its Bayu-Undan stake to 10.64 per cent, from 11.83 per cent, after selling to the Tokyo Electric Power Co and Tokyo Gas Co for a confidential consideration.

By 2009 the project will add six million barrels of oil equivalent for Santos or an additional 10 per cent of its total annual production.

Bayu-Undan is estimated to contain 3.4 trillion cubic feet total recoverable gas and 400 million barrels of condensate and LPG.

Initially gas will be recovered, liquids stripped and gas reinjected back into the reservoir.

The LNG project will commence production in 2006 and involve dry gas from the liquid stripping project being transported by a 500 kilometre pipeline to the LNG plant at Wickham Point, Darwin.

The LNG will get loaded onto tankers, paid for by its Japanese customers.

The total project is estimated to have a life in excess of 25 years.

The liquids - stripped using a process similar to the technology used in the Cooper Basin - will be sold on the world spot market.

Santos shares up nine cents at $5.66 at 1310 AEST.

Australia prepares to start work on massive Timor Gap gas project

AFP, June 16, 2003

Work will begin immediately on a huge gas project in Australia's tropical north after the 2.3 billion dollar (1.53 billion US) Bayu-Undan development cleared its final hurdle, the project developers said.

International oil giant ConocoPhillips announced that it is ready to begin work on the 1.5 billion dollar, three million-tonne per year Liquefied Natural Gas (LNG) plant in Darwin, after receiving final approval from the project's major players.

ConocoPhillips is to build a pipeline from its Bayu-Undan gas field, about 500 kilometres (310 miles) northwest of Darwin in the Timor Sea, to the Darwin facility, which will supply Japanese customers with LNG for 17 years from 2006.

The Bayu-Undan gas field is estimated to contain a massive 400 million barrels of condensate and liquefied petroleum gas and 3.4 trillion cubic feet of natural gas.

East Timor's 90 percent share of revenues from the operation is expected to help lift the embryonic nation from poverty, reaping an estimated 3.0 US billion dollars in revenue from the project over the next 20 years.

"This landmark approval by the Timor Sea Designated Authority marks a significant event for the further development of reserves in the Timor Sea area," ConocoPhillips president Stephen Brand said.

Although Australia will receive only 10 percent of revenues from the field, it will benefit through increased economic activity and new jobs.

The Northern Territory government has estimated 1,000 jobs will be created during the three-year plant construction phase, with 100 workers needed for the plant's operation.

Darwin will also become the major service and supply hub for the plant and pipeline.

The Bayu-Undan field is in the Joint Petroleum Development Area, with production revenue going 90 percent to East Timor and 10 percent to Australia.

John Ellice-Flint, chief executive officer of Santos which holds an 11.8 percent stake in the project, said the final approvals cleared the way for Santos to make its first entry into the global LNG market.

"This is a significant milestone for Santos and establishes LNG as a new cornerstone contributor to group revenue and earnings," he said.

"The approval also signals the start of an additional gas business for Santos in the Northern Territory and South East Asia."

Santos said the combined liquids and LNG project would add over six million barrels of oil equivalent at peak production -- equal to about 10 percent of Santos' 2002 production. 

Gas deal boosts East Timor outlook

CNN, Monday, June 16, 2003

SYDNEY, Australia (CNN) -- The fledgling nation of East Timor is likely to get $3 billion in gas and liquids royalties from Timor Sea fields over the next two decades under a landmark new approval.

The revenue stream will come from the giant Bayu-Undan gas condensate field which lies about 250 kilometers (155 miles) south of East Timor and 500 kilometers north-west of the northern Australian city of Darwin.

ConocoPhillips, the U.S. operator and major shareholder in the Bayu-Undan gas project, announced on Sunday that its gas development plan had been approved by the Timor Sea Designated Authority, the joint Australia-East Timor body which oversees development of the area's resources.

ConocoPhillips said it would now push ahead with a $1.5 billion development that includes a gas pipeline from Bayu-Undan to Darwin and a liquefied natural gas (LNG) plant at Darwin with an annual capacity of 3 million tonnes.

The gas plant is due to begin deliveries in early 2006, with Japan's Tokyo Electric Power Co (TEPCO) and Tokyo Gas agreeing to take virtually 100 percent of output for 17 years.

The Bayu-Undan partners already have the go-ahead for the gas recycle and liquids part of the project, which is expected to begin production of condensate and liquefied petroleum gas in late 2004.

Santos, the Australian partner in the project, said the latest approval would increase total revenue from the Bayu-Undan field to more than Aust. $30 billion ($20 billion).

According to ConocoPhillips, Bayu Undan has 3.4 trillion cubic feet of natural gas and 400 million barrels of condensate.

East Timor is entitled to 90 percent of the oil and gas royalties from the field.

The project is owned 64.14 percent by Houston-based ConocoPhillips, Australia's Santos with 11.83 percent, INPEX of Japan with 11.71 percent and Italy's AGIP (through Eni Australia) with 12.32 percent.

Under an agreement with the Japanese gas buyers, ConocoPhillips will sell a 10.08 percent stake to TEPCO and Tokyo Gas.

In a statement released to the Australian Stock Exchange on Monday, Santos said that under an equity realignment agreement, it would sell a 1.19 percent interest, taking its share down to 10.64 percent.

WHAT A GAS

Northern Territory News, 23 June 2003
By RAJIV MAHARAJ

More than $80 million a year for the next 17 years is expected to flow into the Northern Territory from offshore contracts for the Bayu-Undan gas pipeline, the NT Government claimed last night.

Business Minister Paul Henderson said it had been estimated offshore, non-labour operational expenditure for the $2.3 billion gas project will be about $100 million a year -- but $80 million of this is expected to be spent with Territory businesses.

This works out to about $220,000 pumped into the local economy every day for 17 years.

Mr Henderson said the money would be spent in the NT because local businesses had proved it could handle the demands of such a project.

Darwin businesses already support five floating production facilities in waters to the north.

The businesses supply a wide range of goods and services from food through to drilling equipment, engineering and maintenance support.

"This sector has proved its skills and capacities," Mr Henderson said.

"With the announcement of work due to start on the Bayi-Undan pipeline, the opportunities for the supply sector are greatly enhanced," he said.

The Bayu-Undan gas pipeline project, about 500km northwest of Darwin in the Timor Sea, received the final go-ahead earlier this month.

International oil giant ConocoPhillips will shortly start work on the project which will eventually see Timor Sea gas flow through the pipeline to a new $1.5 billion Darwin LNG facility.

ConocoPhillips will supply Japanese customers with LNG for 17 years from 2006.

Mr Henderson said the Government would continue to "highlight, promote and develop" the capacity of local industry so it could cash in from the construction and operation of the largest project ever undertaken in the Territory.

"This project is a step-change for the NT economy, and we are committed to making sure Territorians reap the benefits in jobs and business," the Business Minister said.

This report appears on news.com.au.

Japanese companies buy into Bayu Undan gas project

ABC Radio Australia News, 1 July 2003

The company developing the Bayu Undan gas field, halfway between Australia and East Timor, has announced a new ownership structure that will include two Japanese companies.

International gas company ConocoPhillips says the Tokyo Electric Power Company Incorporated and the Tokyo Gas company will own 22.5 per cent of the production-sharing contract, which equates to a 10.8 per cent interest in the field.

ConocoPhillips has a 56.7 per cent interest.

Development of the Bayu Undan energy reserve is seen as crucial to East Timor, one of the world's poorest nations.

The Australian government agreed in March that East Timor would recieve 90 per cent of government revenue from the plant.

This story was found at: http://www.theage.com.au/articles/2003/06/16/1055615716696.html

Bayu-Undan gets final go ahead

EnergyReview.net, 3 July 2003
By Hayden Lilienthal

Australia is set to have two LNG production projects running by 2006 after the Bayu-Undan partners have received approval from the Timor Designated Authority for its $2.24 billion liquefied natural gas export project - Australia's second LNG project after the NWS.

The project will be managed out of Darwin, and is based on Bayu-Undan gas reserves (3.4 trillion cubic feet) in the Timor Sea joint development area between East Timor (90%) and Australia (10%).

The commitment is the second stage of the project following the $2.7 billion already invested by the partners on the liquids stripping project, which starts production early next year.

The combined value of gas and liquid exports is now expected to be more than $30 billion over the next 20 years, of which $6 billion would go to East Timor.

For the Northern Territory the agreement comes on the back of last week's Woodside announcement to spend $1 billion developing the Blacktip gasfield in the Bonaparte Gulf and plans by Alcan to spend $1.5 billion expanding production at the Gove alumina refinery.

Santos Managing Director, John Ellice-Flint, estimated the combined liquids stripping and LNG projects would add more than six million barrels of annual oil equivalent to the group's output when it reached its peak.

Roughly equal to 10% of the group's 2002 production effort. It will also add 46 million barrels of oil equivalent to the group's proven reserves.

It is not known whether the pipeline contract for the project has been awarded yet. Multiplex won the rights for the first incarnation of the project before all contracts were scrapped during negotiations over the complex international fiscal arrangements with East Timor.

ConocoPhillips will sell a participating interest in the Bayu-Undan upstream development currently equivalent to a 10.08% unitised interest to TEPCO and TG. Under an equity realignment agreement Santos will sell a 1.19% interest, resulting in an ongoing holding of 10.64%.

Bayu-Undan is in 80 metres of water about 250 km south of Suai in East Timor and 500 km north-west of Darwin. Apart from its gas reserves, the 1995 discovery also ranks as one of the biggest liquids discoveries in the region at 400 million barrels of condensate (light oil) and LPG.

Current ownership is ConocoPhillips of the US (operator, with 64.14%), AGIP of Italy (12.32%), Santos (11.83%) and Japan's INPEX (11.71%).

The LNG project is underpinned by a sales agreement with Tokyo Electric Power and Toyko Gas for the annual delivery of three million tonnes of LNG for 17 years, starting early in 2006. 

Bayu Undan delays hit East Timor

Herald Sun, 06 December 2003
By Nigel Wilson

PRODUCTION from the Bayu Undan gas recycling project in the Timor Sea has been delayed at least eight months with implications for East Timor's revenues running into millions of dollars.

And the production postponement could hit Santos, the only Australian participant, because of a later contribution to its income from its 10.64 per cent stake.

Bayu-Undan lies in the Timor Sea, 500km off Darwin and 250km south of East Timor.

Darwin area manager of project operator ConocoPhillips, Blair Murphy, yesterday confirmed the estimated start of full commercial production from the field had been delayed from April next year until November.

He said the timetable had been affected by construction and delivery delays in both the Bayu production platforms and the floating production storage and offtake vessel.

Mr Murphy added that while there had been technical difficulties with two of the initial production wells being drilled on the field, more recently two other wells had come in better than expected.

This meant the drilling program was back on schedule.

The $US1.64 billion ($2.22 billion) project will involve the production and processing of wet gas, the separation and storage of condensate, propane and butane, and the reinjection of dry natural gas back into the Bayu Undan reservoir.

A paper presented to a meeting of East Timor donors in Dili this week said the delay meant ConocoPhillips' product profile for 2004 showed a decrease in liquids production from 22 million to 12 million barrels.

This is only about one third of the production estimate of 33 million barrels that was anticipated in 2001 when ConocoPhillips signed an agreement covering Bayu Undan development with the East Timor administration.

The paper said this would result in a significant decline in the estimates of payments to the East Timor Government.

"While the projected Timor Sea oil and/or gas revenues for 2005-06 and 2006-07 have been significantly reduced, the revenue estimates for subsequent years have remained broadly unchanged," it said.

The major reductions in revenues will fall mostly in the next four years.

East Timor received $US26.4 million in revenue from the Timor Sea in financial year 2002, but this is estimated to drop to $US17.1 million this year, to $US9.7 million in 2004-05 and to $US7.7 million in 2005-06 before increasing to $US28.8 million in 2006-07.

Over the same period, East Timor's budget rises from $US24.6 million to $57.5 million.

Most of East Timor's current income comes from the small Elang Kakatua field which are projected to be shut down by the end of next year though high international crude oil prices may make it economical to extend the field's life.

Bayu-Undan Production

Press Release from Santos, 7 December 2003 (also PDF)

Further to an article that appeared in the Weekend Australian (6-7 December 2003), Santos Limited advises that the gross 2004 liquids production from the gas recycling project of 12 million barrels - as referred to in the article - is consistent with estimates already provided to the market by Santos over the past few months.

The Operator (ConocoPhillips) has advised that it expects first gas for commissioning purposes to commence by year end and first production to occur in April 2004 (as previously advised by Santos).

As also previously advised, but of increasing significance, Santos has US$168 million of Bayu-Undan liquids revenue hedged at an average AUD/USD exchange rate of 56.29 cents.

Santos released the Operator's project production profile out to 2013 at its recent Investor Conference held in Adelaide.

Santos Limited is a major Australian oil and gas exploration and production company with interests in all Australian hydrocarbon provinces. The Santos Group also operates in the USA, Indonesia and PNG.

FOR FURTHER INFORMATION PLEASE CONTACT:

Graeme Bethune
General Manager Business Development, Santos Ltd
08-8218 5157 or Mobile 0419 828 617

Italians may say arrivederci to Bayu

The Australian, December 19, 2003
by Nigel Wilson

Energy

SPECULATION is again mounting that Italian giant ENI-Agip may sell its stake in the Bayu Undan gas project in the Timor Sea.

Earlier this week ENI formally pulled out of the Chinguetti exploration program off Mauritania with sources close to the deal citing the Italian group's lack of interest in projects in which it was neither operator nor majority shareholder.

ENI-Agip is a 12.3 per cent shareholder in the $3 billion Bayu Undan project operated by ConocoPhillips.

Three years ago, it was beaten by the then Phillips Petroleum for 8.25 per cent minority Bayu stakeholder, Petroz, in what became an acrimonious takeover battle.

Phillips' 70c a share offer topped a 56c bid by ENI, which kept a 11.88 per cent stake, sufficient to block Phillips from 100 per cent compulsory acquisition.

But it is understood Phillips now has about 93 per cent of Petroz, having crossed the 90 per cent threshold in February, but the market has not been informed of whether compulsory acquisition is planned.

ConocoPhillips did not return calls yesterday while Santos, the only Australian stakeholder remaining in the Bayu Udan project with 10.64 per cent, declined to comment on whether it would be interested in lifting its share or had been in discussion with ENI-Agip concerning its Timor Sea plans.

Bayu Undan is currently Santos's most significant offshore investment and the LNG project has been enthusiastically endorsed by its managing director, John Ellice-Flint.

The LNG development is the second stage of the Bayu-Undan project and is estimated to cost about $US1.5 billion. It is underpinned by contracts with The Tokyo Electric Power Company, Incorporated and Tokyo Gas for three million tonnes of LNG a year for 17 years, with shipments to begin in early 2006.

Analysts suggested yesterday that if the Bayu Undan stake became available, Santos would be keen to lift its involvement in the LNG project.

SINGAPORE, Feb 15 2005 (Reuters) - Bayu Undan condensate loadings will stop in April to install a mercury-removing unit at the field's floating, production, storage and offloading vessel (FPSO), traders said on Tuesday.

Two to three 600,000-barrel cargoes of the sweet condensate are loaded every month and mainly head to Northeast Asia.

"The process is expected to last up to a month with the next spot sale slated for May," said a Singapore-based trader.

The development, which pumps 40,000-60,000 barrels per day (bpd) of condensate, lies in shallow waters of the Timor Sea Joint Petroleum Development Area between East Timor and Australia.

ConocoPhillips could not be immediately reached for comment.

Traders said the issue of mercury content had not proved problematic for refiners so far, but the stoppage of loadings for one month might imply additional work on corroded pipes. hier klicken!

"There is serious corrosion and the facility is very young," a trader said.

Total condensate and gas liquids output stands at 115,000 bpd.

In a second phase, the Bayu Undan development will start delivering liquefied natural gas to Japan by early 2006.

The project holds 400 million barrels of condensate and natural gas liquids and 3.4 trillion cubic feet of natural gas.

ConocoPhillips has a 56.72 percent stake in the project. The balance is split almost evenly between Italy's ENI , Australian oil and gas producer Santos , Japan's INPEX and Tokyo Gas Co . (Additional reporting by Joanne Collins in Melbourne, and Jiwon Chung in Tokyo)

One Bayu Undan condensate cargo to load in April

TOKYO, March 4 2005 (Reuters) - One cargo of Bayu Undan condensate will be loading in April, an equity holder in the field said on Friday, against traders' earlier expectations that operational work would shut down production for the entire month.

"Scheduled maintenance will be conducted at the field, and accordingly, April's shipment volume will be reduced," a source at one equity holder said, adding that one cargo would be loading.

Last month, trading sources said they did not expect any shipments from the field during April due to operational work to install a mercury-removing unit at the field's floating, production, storage and offloading vessel (FPSO).

"I heard one early April cargo was available. I assume it is the last of the cargoes before the facility is shut for repairs," a trader said.

Operator ConocoPhillips (COP.N: Quote, Profile, Research) could not be immediately reached for comment.

The Bayu Undan field pumps 40,000-60,000 barrels per day (bpd) of condensate, and lies in shallow waters of the Timor Sea Joint Petroleum Development Area between East Timor and Australia.

The project holds 400 million barrels of condensate and natural gas liquids and 3.4 trillion cubic feet of natural gas. Two to three 600,000-barrel cargoes of the sweet condensate are loaded every month and mainly head to Northeast Asia.

Spokespeople from smaller project partners, INPEX and Tokyo Gas (9531.T: Quote, Profile, Research) , confirmed that scheduled maintenance would be conducted at the field soon, but declined to give details.

ConocoPhillips has a 56.72 percent stake in the project. The balance is split almost evenly between Italy's ENI (ENI.MI: Quote, Profile, Research) , Australian oil and gas producer Santos (STO.AX: Quote, Profile, Research) , Japan's INPEX and Tokyo Gas Co. (Additional reporting by Maryelle Demongeot in Singapore)

Australia's Top Engineering Award Goes to Bayu-Undan Partners Fluor Corp.

February 6, 2007

Fluor Corporation and its partners ConocoPhillips and WorleyParsons have been awarded the top engineering honor by Engineers Australia, besting 40 other finalists.

The Sir William Hudson Award was presented for the $2.5 billion Bayu-Undan Gas Recycle Project, an offshore liquid stripping plant for oil and gas owned by ConocoPhillips.

The Bayu-Undan Gas Recycle Project is one of the most complex liquid stripping projects ever built offshore. The project, located in the Timor Sea, north of Australia, includes a remote wellhead platform that serves as a drilling center for 14 wells and a central production and processing platform connected via a bridge to a compression, utilities and quarters platform.

Innovations in the project include the processing design concept that reduced pipeline costs by $25 million; the world's first multiuse separate propane, butane and condensate floating storage facility and offloading vessels. Construction of the project met stringent environmental, technical and safety standards. The complexity of the project was compounded by its remote location and its sheer size.

The team used state-of-the-art processing technology and comprehensive risk analysis to manage the process complexities. Facilities and other structures were extensively modeled in 3D utilizing advanced PDS model technology.

Bayu-Undan Phase 1 had in excess of US$100M capital expenditure savings. The first gas and condensate was reached on schedule and exceeded production targets by 22 percent in its first year.

The Sir William Hudson Award was presented in fourth quarter 2006 at Parliament House in Canberra, Australia. Engineers Australia is the national forum for the advancement of engineering and the professional development of engineers. With an excess of 80,000 members embracing all disciplines of the engineering team, Engineers Australia is the largest and most diverse professional body for engineers in Australia.

Fluor Corporation provides services on a global basis in the fields of engineering, procurement, construction, operations, maintenance and project management.

Ezra clinches milestone contract for first heavy lift accommodation/pipelay vessel

Offshore Shipping Online News - June 19, 2007

Ezra Holdings Limited reports that it has quickly followed up on its new deepsea construction and deepwater vessel orders with a contract for the soon-to-be delivered Lewek Champion.

The contract for its first heavy-lift, accommodation and pipelay vessel was awarded by international integrated energy major ConocoPhillips.

Lewek Champion is expected to be delivered before the end of the company's fiscal year 2007.

Ezra secured the contract through Emas Offshore Construction and Production Pte Ltd, a subsidiary of its 88 per cent-owned EOC Limited, which is listed on Norway's OTC. The charter will commence in the first half of fiscal year 2008.

Lewek Champion will be deployed in the Timor Gap, an area of ocean flanked by Timor, Indonesia, and Australia. It will be used for accommodation support and decommissioning work in the planned shut-down of the Bayu Undan platform.

The dynamically positioned vessel is equipped with an 800 tonne heavy-lift crane and is purpose-built for deepsea construction support work in waters exceeding 1,000m and can accommodate more than 475 men.

Recently, Ezra also announced an order for its second pipe-laying, accommodation and maintenance vessel.

Santos ups stake in Bayu Undan

The Australian (Australia), July 31, 2007
Nigel Wilson, Energy Writer

SANTOS has emerged as the second largest player in the Bayu Undan gas-stripping and LNG operation after a two-year formal redetermination process.

The decision will provide Santos with additional long-term revenue and reinforces the company's strategy to have more than half its output, and thus its revenue, derived from LNG by the end of next decade.

Under the new arrangements, ConocoPhillips, operator of the Timor Sea development that provides the bulk of East Timor's revenue, will increase its stake marginally.

The new interests include: ConocoPhillips 57.2 per cent (previously 56.27); Santos 11.4 per cent (10.64); INPEX 11.3 per cent (10.52); ENI 11 per cent (12.04); and Tokyo Electric Power Company/Tokyo Gas Company combined 9.2 per cent (10.08).

Santos is the only Australian-listed company in the Bayu Undan joint venture.

The Bayu-Undan field is located in 80m of water about 500km northwest of Darwin. The development is in two parts, with natural gas liquids such as propane, butane and condensates being stripped from the gas at facilities on site, with the dry gas subsequently piped to a 3.5 million tonnes a year LNG plant at Wickham Point in Darwin Harbour.

East Timor takes 90 per cent of government revenues from the project and Bayu Undan is estimated to have provided up to $US1.5 billion ($1.78 billion) for the embryonic nation's petroleum fund.

Santos told the stock exchange yesterday the increased stake would take effect immediately and would be backdated to the beginning of field development activities.

Production of LPG and condensates from the Bayu Undan field began in 2004 while LNG production from the Wickham Point plant in Darwin began early last year.

Santos declined to disclose the benefit of the backdated share with industry sources, suggesting it could be about $US10 million.

The company does not provide a profit breakdown for individual business units.

The benefit to Santos will depend on movements in the crude oil price and its impact on the long-term contracts the Darwin LNG project holds with Tokyo Electric and Tokyo Gas.

Santos officials said the redetermination process had produced a good result for the company and said the outcome was pleasing.

The partners are evaluating exploration results for a number of discoveries in the Timor Sea that may be developed for a proposed $US6-10 billion expansion of Wickham Point, which will more than double its capacity as early as 2012.

The Wickham Point site has production approvals for 10 million tonnes with ConocoPhillips publicly committing to a possible 5-7 million tonnes a year development, based on Timor Sea gas supplies from Woodside's Greater Sunrise development, or the Caldita field, which Santos shares with ConocoPhillips.

40-day maintenance shutdown for gas field

By - Alison Bevege, Northern Territory News (Australia), September 5, 2007

THE Bayu Undan gas field will shut down within two weeks in a huge logistical maintenance exercise involving hundreds of workers and support hubs in both Darwin and the East Timorese capital of Dili.

The project, 500km northwest of Darwin in the Timor Sea, has an estimated 3.4 billion cubic feet of gas and supplies the Wickham Point LNG plant.

Bayu-Undan will be inspected and maintenance work will be carried out. The facilities will also be upgraded.

Operator ConocoPhillips said workers will toil 24 hours a day on the operation to get the gas field back online as soon as possible.

The company estimates a total of 140,000 work hours will be spent, working in two 12-hour shifts per day for the duration of the shutdown.

About 575 workers will support the shutdown offshore, with 360 employees mobilised from Dili over five days.

There will be six helicopter flights per day between Dili and the gas field.

A separate warehouse has been leased in Darwin to house goods needed in the shutdown.

Darwin's Wickham Point LNG plant will also be involved in the maintenance activities, with up to 60 vessels to be scrutinised.

About 40,000 work hours will be spent on the Darwin LNG plant and 200 employees are to support the project.

The shutdown is expected to last up to 40 days. ConocoPhillips refused to say how much the shutdown will cost

Idemitsu-Mitsubishi JV to Buy East Timor LPG

Tokyo, Sept 10, 2007 (Jiji Press) - A joint venture set up by Japan's Idemitsu Kosan Co. <5019> and Mitsubishi Corp. <8058> said Monday it has signed an agreement to buy liquefied petroleum gas produced at a gas field off East Timor.

The agreement, which will take effect for a one-year period starting in January, allows the joint venture, Astomos Energy Corp., to buy 1.2 million tons of LPG from the Bayu-Undan gas project led by U.S. oil giant ConocoPhillips.

Astomos Energy is the first Japanese LPG wholesaler that has signed a term contract to buy LPG from the Bayu-Undan field, located about 250 kilometers off the south coast of East Timor, the company said. It plans to extend the contract for 2009 and later.

The move is designed to lower Astomos Energy's reliance on the Middle East for LPG supply as over 80 pct of its annual LPG imports that total 3.2 million tons come from the region. The contract will help push down the ratio to some 55 pct.

Astomos Energy is 51 pct owned by Idemitsu, a top Japanese oil refiner, and the rest by Mitsubishi, a major Japanese trading house.

Gas field shutdown over

Northern Territory News (Australia) , October 24, 2007

The Bayu-Undan gas field maintenance shutdown is finished.

Hundreds of workers toiled for 35 days to maintain and inspect the gas field, 500km northwest of Darwin in the Timor Sea.

Employees worked around the clock in two 12-hour shifts.

Support workers were mobilised from support hubs in Darwin, the East Timorese capital, Dili, and Manila in the Philippines.

About 500 workers supported the shutdown offshore, with 360 employees mobilised from Dili over five days.

About 40,000 work hours were spent on the Darwin LNG plant, with 200 employees supporting the project.

The next shutdown is set for late 2009 or early 2010, company spokesman Robin Antrobus said.

The Timor-Leste Institute for Development Monitoring and Analysis (La’o Hamutuk)
Institutu Timor-Leste ba Analiza no Monitor ba Dezenvolvimentu
Rua D. Alberto Ricardo, Bebora, Dili, Timor-Leste
P.O. Box 340, Dili, Timor-Leste
Tel: +670-3321040 or +670-77234330
email: info@laohamutuk.org    Web: http://www.laohamutuk.org    Blog: laohamutuk.blogspot.com