Regional LNG: Tepco and Tokyo Gas to buy LNG from Darwin project

Japan's utility firm Tokyo Electric Power Co. (TEPCO) and Tokyo Gas Co., Ltd. signed a LNG purchase agreement with Darwin LNG Pty Ltd., for the LNG project in Darwin, Northern Territory, Australia, the companies said Monday.

The companies' release said that the contract has been in negotiation based on a basic agreement (Heads of Agreement: HOA) signed on March 11th, 2002.

Contract volume is reported at 2 million ton per year (average year) for TEPCO, and 1 million ton per year (average year) for Tokyo Gas Co., Ltd for 17 years starting January 2006. Both companies will arrange for transport using their own LNG ships.

"The agreement is flexible and economical, permitting expansion of LNG transportation destinations beyond the companies' terminals under certain conditions and allowing FOB (Free on Board) as the delivery condition. This will allow the companies to adapt to changes in the business environment such as deregulations in the energy market," teh companies said.

Gas for Darwin LNG project would be supplied from Bayu Undan Gas field.

Bayu-Undan is a gas condensate field that contains estimated recoverable hydrocarbons of 400 million barrels of condensate and liquefied petroleum gas and 3.4 trillion cubic feet of natural gas. The field straddles production sharing contract areas 03-12 and 03-13 in the JPDA between Timor-Leste and Australia. It is located in 80 meters of water about 250 kilometers south of Suai, Timor-Leste, and 500 kilometers northwest of Darwin, Australia.

The second phase is a liquefied natural gas (LNG) project. It is expected to be complete in early 2006, at which time the first LNG cargo from the 3.52 million-ton-per-year facility is scheduled for delivery. It will involve a gas pipeline from the Bayu-Undan field to a LNG facility at Wickham Point, near Darwin.

ConocoPhillips is the operator of the Bayu-Undan project, with a current participating interest of 56.72 percent. Co-venturers and their current participating interests are: Eni Australia, 12.04 percent; Santos, 10.64 percent; INPEX, 10.53 percent; Tokyo Electric Power Company, Incorporated and Tokyo Gas Co., Ltd, an aggregate of 10.08 percent. (alex)