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Industry juniors sign for supply

LOCAL industry juniors Liquefied Natural Gas (LNG) and Range Oil have announced supply deals allowing them to expand their businesses. LNG signed an exclusivity agreement (EA), giving the company rights to 800 billion cubic feet of gas from the Senoro gas field in Central Sulawesi, Indonesia, which will allow it to move to a bankable feasibility study into the development of a $US160 million liquefied natural gas plant. The gas supply would be used as feedstock for the company’s proposed development of a 700,000 tonnes per year liquefied natural gas production plant, to be built on the Indonesian coast near the town of Luwuk and the onshore Senoro gas field. The EA was signed with the Indonesian gas field owners, PT Pertamina and PT Medco E&P Tomori Sulawesi. It is conditional on the satisfaction of prescribed milestones by the company and the owners. Following this, the parties intend to negotiate a 20-year gas supply agreement for the supply of 120 million cubic feet of gas per day to LNG. The company said in a statement that: “The EA establishes a program to pursue firm LNG sales contracts, and progress to a bankable feasibility study and definitive gas supply agreement with the Senoro gas field owners”. LNG added that it is in “advanced negotiations with several interested gas customers and expects the full production capacity of the proposed plant to be sold to four customers, in four different countries, in the Asian and Indian sub-continent regions”. The company is currently in the process of establishing a joint venture with Indonesian company PT LNG Energi Utama, which will undertake the LNG plant development and fund the capital cost of the project. Range Oil, the wholly-owned subsidiary of local petroleum company Empire Oil and Gas, has entered into a five-year crude oil supply agreement with BP Australia and BP Kwinana refinery for the sale of up to 1,000 barrels of crude oil per day. The agreement also makes provision for the sale of additional crude to BP, should further oil reserves be discovered and proved during the company’s planned drilling program in the third quarter of this year. Empire also said that the Rough Range oilfield production facility near Exmouth was nearing completion, with start-up planned for June 30, after some delays in construction experienced due to very unseasonal rainfall and flooding. The agreements come as the partners in the North West Shelf gas project announced the formal approval for the $2 billion Train 5 expansion.

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