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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 Undan 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.

[Note: four years after this article appeared, ENI had not sold their share in Bayu-Undan.]

The Timor-Leste Institute for Development Monitoring and Analysis (Lao Hamutuk)
Institutu Timor-Leste ba Analiza no Monitor ba Dezenvolvimentu
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P.O. Box 340, Dili, Timor-Leste
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