Since the 360-P disappointment I have been looking at...

Since the 360-P disappointment I have been looking at developments in another neck of the woods.

Magellan have been guaranteed the funds to complete the $100m down payment for Evans Shoal by its largest SH YEP.

The original cut off point was 25 Dec but it has been agreed to extend this this until 31 Jan by Santos and MGN.

'The ASX release is here'

I thought MGN would not meet the deadline but now that MGN have found the money it will be interesting to see how the stranded gas at Evan's Shoal is developed from here.

MGN still need to find an extra $100m to finalise the purchase and will need funds for further drilling and development. This is from the original agreement to purchase in the ASX release 25 Mar 2010.

'Under the agreement, Magellan will pay Santos time-staged cash consideration equal to Australian $100 million (US$91 million equivalent) for its interest in Evans Shoal. Magellan would also pay additional contingent payments to Santos of Australian $50 million (US$45.5 million) upon a favorable partner vote on any final investment decision to develop Evans Shoal and Australian $50 million (US$45.5 million) upon first stabilized gas production from NT/P 48.'

The other co-owners in the Joint Operating Agreement for Evans Shoal are Petronas Carigali Pty Ltd (25%), Shell Development Pty Ltd (25%), and Osaka Gas Australia Pty Ltd (10%).

It will be interesting to see if any or all of these partners are interested in Methanol production or will just pay their share of the well development costs and sell on their share of production.

MEO may be able to strike a relationship with MGN and help them fast track early development of the field by off-taking some gas for the TSMP project. Perhaps they may even participate in development of the gas in some way.

Because they found it difficult to meet the deadline for the initial purchase, will need assurances from the other partners as well as the need to finalise payment to Santos I am sure MGN will be looking for early income from the project

Perhaps MGN will just keep all the gas for processing in Darwin but this will be a long way down the track with the necessary approvals etc needed.

MEO do have Blackwood but the prospect of an early gas feed from Evans Shoal would be extremely helpful in progressing the TS project.

Since the split of Timor Sea Petroleum in 2000, when Santos took over Evans Shoal leaving MEO with NT/P68 and Tassie Shoal, Santos have never been interested in the production of Methanol from the Evan's Shoal gas which is high in CO2.

This was a pity because the TSMP project was originally dependent on the ES gas to be a viable proposition. At the time MEO Australia (formerly ESP and Methanol Australia since the split) were left high and dry.

Perhaps we have turned full circle. I hope so.

Like I say, I will be watching development in the area very closely from here.

#:>))