REGIONAL LNG: Bayu-Undan LNG project gets final approval

US oil giant ConocoPhillips and Australian top oil and gas producer Santos Limited announced on Monday that Timor Sea Designated Authority had given approval to develop Bayu-Undan liquefied natural gas (LNG) project, which lies across Australia-Timor Leste border.

ConocoPhillips said with the final approval, participants of Bayu-Undan project will proceed immediately with engineering, procurement and construction (EPC) for 3 million tons per annum Darwin LNG project.

The project involves a gas pipeline from Bayu-Undan in the Timor Sea between Australia and East Timor to Darwin, in Northern Australia, and a liquefied natural gas (LNG) facility located at Wickham Point, Darwin.

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.

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 AGIP with 12.3 percent.

The project overcame its biggest hurdle last month when the Australian government finally ratified a treaty with the world's newest nation, East Timor, governing the shared waters between the two nations.

The Timor Sea Treaty provides a legal and fiscal framework for oil and gas projects, including Bayu-Undan, within 62,000-sqkm resource-rich region and splits revenue from the area 90:10 in favor of East Timor.

The project's first stage, Gas Recycle (Liquids) Project, is due to come on stream in the first half of 2004.

ConocoPhillips reiterated it would sell Phillips Petroleum Timor Sea Inc. to TEPCO and TG, which will eventually result in the Japanese companies owning a 10.08 percent interest in the unitized Bayu-Undan field, pipeline and the LNG facility. (alex)