Australia?s AWE acquires stake in S. Sumatra?s LPG project

Australian Worldwide Exploration Ltd (AWE) announced on Monday that it had signed a conditional Heads of Agreement to acquire a 90 percent equity interest in PT Ogspiras Basya Pratama (OBP), a company that is developing a liquid petroleum gas (LPG) extraction project near Palembang in South Sumatra.

AWE said in a statement that it would fund 100 percent of the remaining capital expenditure for the project, which is currently under construction.

?AWE is budgeting A$30 million (up until first production at the end of 2006) to set-up its Indonesian operation and complete the remaining construction activities on the LPG plant,? the company said, adding that it would fund the project via a placement of ordinary shares.

According to AWE, OBP has negotiated a 15 year agreement with state-owned oil and gas firm PT Pertamina for the purchase of raw feed-gas at the flow rate of 60 million cubic feet per day for the LPG plant. The project is adjacent to Pertamina?s major South Sumatran gas pipelines.

Gross liquid sales from the plant are estimated to be in excess of 1.6 million barrels plus over 500,000 tons of LPG througout the 15-year project life and AWE expects revenues of more than US$230 million over the period.

?Our participation in the Indonesian LPG Project is AWE?s first significant investment outside our traditional Australian and New Zealand core asset area and comes after rigorous evaluation of the risks versus reward scenarios. The LPG Project and its potential for further expansion beyond the initial base case scenario may provide AWE with a fifth cornerstone asset area? said AWE Managing Director, Bruce Phillips, in the statement.

The statement added that OBP would retain the rights to all liquids extracted from the plant and has the necessary rights to sell the liquid products domestically and/or internationally.

AWE is an Australian oil and gas exploration and production company listed on the Australian Stock Exchange.(Robert)