15 years ago Albers et al had a 'far-fetched' idea to build a billion dollar gas processing plant in shallow waters of the timor sea in order to process the plentiful amounts of stranded gas in the region.
This area of shallow water is called Tassie Shoal, and is located just to the south of the large Evans Shoal gas field.
At the time, Shell liked the idea, however they didn't believe that MEO would be able to obtain environmental approval. It was a testament to management at the time that in In December 2002, after extensive consultation with Aboriginal, conservation and fishing groups, and preparation of a full Environmental Impact Statement, MEO received Commonwealth environmental approval to install two world-scale methanol plants on Tassie Shoal, to be supplied by Evans Shoal gas.
After receiving the environmental approval for the methanol project MEO looked at how they could expand the offshore concept to include LNG production as well as they owned this perfect 430 Ha area of shallow water with approval to install plants.
Subsequently, MEO were hit hard by the asian financial melt-down, and the opportune Santos approached MEO to buy their interest in Evans Shoal. Interestingly, at the time Santos took a half million dollar placement of MEO shares to initiate the LNG engineering studies. After defining the project and undertaking due diligence, MEO managed to obtain Commonwealth approval for the LNG plant until 2052!
The director at the time, Chris Hart, was quoted as saying “I think floating LNG is becoming really feasible now, so there may not be this driver to push for onshore projects."
Fast forward to January 2007, and such was the genuine importance of Tassie Shoal to the country, that the Federal Government had granted MEO "major project facilitation status" for the LNG and methanol projects. In other words, this is a big, big deal.
A spokesperson for the federal government at the time stated:
"MEO is currently conducting further technical appraisals of its exploration lease adjoining Tassie Shoal, as well as approaching potential gas suppliers in the region in an effort to secure suitable feed gas for the Tassie Shoal projects. Depending on the quality and quantity of the available gas, the projects could proceed independently or as an integrated facility."
In the last year or so there has been a huge flurry of activity in the Australasian oil and gas sector, with none more impressive than the migration of Italian giant Eni into the region. It is tremendous news for all MEO shareholders that Eni have been so aggressive in their quest to secure oil and gas reserves in the region.
Eni management were quoted as saying, "In Australia, and Indonesia building on 700 million barrels already is covered, we are expanding our portfolio and fast tracking the evaluation of recently acquired exploration assets including the North Canal in Indonesia and Avon Shale, Heron and Blackwood in Australia offshore. All of our programs in the area are with the next full year encompasses 24 wells and €300 million of CapEx with the objective of fast tracking development with synergies through existing L&G facilities."
By far and away the single biggest turning point in the Tassie Shoal story was Eni purchasing a stake in the Evan's shoal gas field for a minimum cost of $250 million. A company does not do this if it does not have a plan to monetise the gas field!
In addition, Eni have farmed in to our Heron and Blackwood projects and have been strangely pro-active in obtaining seismics and obtaining multiple other interests in the region.
It is clear that they have their eye on Tassie Shoal as the development choice for their gas reserves in the area. I also believe that discussions regarding this matter are really heating up. This is evidenced by MEO's appointment of Robert Zammit, the lead negotiator for the Gorgon LNG project! He was brought in on the 1st December for the specific purpose of monetising Tassie Shoal, and MEO couldn't have got a better man for the job.
It is also of no co-incidence that MEO sought to re-gain their 100% interest in the Tassie Shoal project when things started to heat up. MEO state that expressions of interest to participate in these gas processing projects are occurring as we speak, however, i say that Eni have already shown their hand by virtue of their recent actions and the money they have splurged.
There has been recent transactional evidence for a marked increase in the value of gas in the region surrounding Tassie Shoal and MEO have the readymade commercial solution to monetising the high CO2 gas and securing long term tenure to gas resources.
People, MEO is a 24c company with multi-billion dollar assets. I am not ramping when i say every one should get on board. When Tassie Shoal comes into fruition, every Australian will wish they could join the rise and they will all wish they were shareholders in this company.
News of the monetisation of Tassie Shoal is not far away now, and on this alone, MEO will be trading above $1.00.
MEO Price at posting:
24.5¢ Sentiment: Buy Disclosure: Held
