appea and magellan

from The Australian Business P26 16th April - Matt Chambers

THE record crowd at the annual oil and gas industry summit held in Perth last week was drawn by surging energy prices and a Japanese tragedy-driven jump in demand for the nation's gas exports.

But courtesy of West Australian Premier Colin Barnett, the 3400 attendees had more to talk about at the booths of the Australian Petroleum Production and Exploration Association conference and nearby Perth bars.

Barnett grabbed the headlines with his strident warning to BHP Billiton not to bid for Woodside Petroleum -- which the mining giant says it is not considering -- but many of his less-reported comments in his opening address raised eyebrows.

Apart from his extraordinary declaration that he had been directly approached about a takeover by BHP and that Woodside should not be taken over by anyone at all, Barnett told the industry it needed to do a number of things better if it wanted government and public support and to continue developing its share of an estimated $170 billion of planned WA mining and energy projects.

These included not to use predominantly fly-in, fly-out workers at remote projects; to make sure gas prices into domestic power plants did not rise above prices into liquified natural gas plants; and to ensure WA fabrication was used in the building of megaprojects.

He also instructed industry to ensure the giant Browse gas field was developed through Woodside's plans of a plant at James Price Point near Broome, not the existing North West Shelf development to the south, as is the wish of BHP and some of the other minority Browse partners.

Barnett said he figured the industry would dismiss most of what he had to say, but hoped they would mull it over their wines in the coming evenings.

He was right, on both counts.

"If you listed where Barnett is on most of these issues and where industry is, you would find there is a big gap," said one senior oil executive later that night.

The industry was surprised by Barnett's salvo against BHP, though not by his view -- that a takeover could slow development of WA's resources.

BHP was the only one of Australia's top-five listed energy companies not to send a senior representative, but was forced to douse speculation it was still entertaining a bid for Woodside -- and Barnett's comments.

While BHP is the biggest oil and gas producer listed in Australia, its head office is run out of Houston.

That said, there had been little evidence, apart from the mounting articles, a bid was on the way. Departing Woodside chief Don Voelte gave an emotional farewell speech, and on the sidelines was saying his successor was likely to be announced shortly after this week's annual general meeting.

Indications are he will leave the most senior Australian oil and gas job earlier than mid-year, boosting the odds an internal replacement -- requiring no leave period -- may emerge.

But rumours freshly unemployed BG Group chief financial officer Ashley Almanza was the new Woodside chief lingered, as again was the unlikely name of Origin chief Grant King, who has previously ruled himself out.

The numbers at APPEA this year were about 30 per cent higher than the previous record of 2600 in Brisbane last year.

The official message was that a carbon tax could halt some of the nation's big planned LNG developments, but most of the focus was on the opportunity growing Asian demand is providing and how to tap it.

Voelte was the only head of a big Australian firm to present on a lighter-than-usual speaker list, but Santos chief David Knox, Origin Energy chief Grant King and Oil Search chief Peter Botten were all seen pressing the flesh.

Knox was seen in talks with Northern Territory Chief Minister Paul Henderson and Bill Hastings, the chief executive of Maine-based Magellan Petroleum. Magellan's $150million purchase of Knox's Evans Shoal gas field has stalled because Magellan was unable to find with the cash in time.

But with Henderson backing Hastings' plans for a methanol plant at Darwin at the conference, the target of a May 31 payment remains.

Away from the conference, Knox revealed frustration at inaction from his Darwin LNG joint venture partner ConocoPhillips on expanding the plant. The one-train, 3.2 million tonnes-a-year LNG plant is one of only two operating in Australia and has approval to produce 10 million tonnes a year.

But despite the supercharged economics of expansion versus a new LNG plant, there has been no movement on more production since exports started in 2005. "It's been a disappointment for us, we have gas in the area, so we've been pressing hard to get an expansion," Knox said. "They haven't given a specific reason why, they just believe there are options that are better for them in their portfolio."

One notable entrant to the conference was Saudi Arabia's national oil company Saudi Aramco.

The most influential oil producing country in the world had its own stall at the Australian conference for the first time.

Rather than entertaining a move into the Australian oil and gas sector, the Saudis manning the booth said the firm's interests were more about marketing, and did not dismiss the idea of setting up an office here.

At the conference, APPEA chief executive Belinda Robinson said she would step down at the end of June, after six years heading the country's peak lobby group. A successor is yet to be named.