Partners in an Australian group have agreed to terms for a $180 million (Australian) pipeline and gas development project to supply South Australia with gas from Southwest Queensland fields,
The group, led by Santos Ltd., Adelaide, last month signed agreements giving the project a green light after completing a pioneering production unit agreement.
The project calls for laying a 190 km pipeline from processing units to be installed at the Jackson plant in Southwest Queensland to Moomba in, Northeast South Australia.
Under the deal, Southwest Queensland fields will supply South Australia 285 bcf of gas beginning in January 1994. That volume represents about 30% of projected South Australian gas demand to 2004.
The supply contract is reported to be worth $100 million/year during the 10 year term. Total royalties to Queensland are projected at $50 million during the contract term.
PRECEDENTS
The contracts represent a significant step in efforts to boost cross-border sales in Australia's natural gas industry. And the new unit agreement is much less complicated than an existing one that has stymied gas development in South Australia.
Each member of the new unit has a single participation factor not subject to review or adjustment that covers development of existing reserves and exploration for additional reserves.
At the same time, the unit agreement is flexible enough to allow members of the group to participate in other projects. It gives members a firm idea of their expected revenue shares during the life of the project.
The unit agreement covering South Australia fields, by contrast, requires three reviews and adjustments each year, a practice that has led to legal challenges and acrimony among partners.
Partners in the Southwest Queensland production unit are Santos 57.2%, Delhi Petroleum (Esso) 23.2%, Sagasco Resources 16.5%, Australian Hydrocarbons 1.2%, Claremont Petroleum 0.95%, Ampolex 0.71%, and Oil Co. of Australia 0.24%.
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