pipeline on again

MELBOURNE, Nov 25 (Reuters) - Queensland Alumina Ltd said on
Tuesday it expected to soon sign a long-term gas deal with the
ExxonMobil Corp -led $3.5 billion pipeline joint venture
linking Australia to Papua New Guinea.
The deal for more than 20 petajoules (19 billion cubic feet)
of gas a year over more than 10 years would bring potential sales
signed up for the project within the range ExxonMobil has said is
needed to start the development and design phase of the 3,200-km
(2,000-mile) -long pipeline.
"All I can say is that we are in negotiations with PNG and we
are to get to some sort of agreement fairly soon," Queensland
Alumina Ltd Managing Director Johann van Zyl told Reuters.
"We are talking in excess of 20 petajoules a year. It'll be a
long-term arrangement -- in excess of 10 years," he added.
The project has so far signed up potential sales of 84 to 135
petajoules (79 to 127 billion cubic feet) a year. Exxon Mobil has
said 100-150 petajoules is needed to begin the engineering and
design phase.
Australian-listed PNG oil and gas producer Oil Search
has a 51.36 percent stake in the project for which
construction needs to begin next year if the first gas deliveries
earmarked for 2007 are to be met.
Queensland Alumina (QAL), which operates the 3.8 million
tonnes-a-year Gladstone refinery, is planning to convert its
coal-fired boilers to gas which van Zyl said was the reason for
the PNG deal.
"If we change our present energy sources then we need more
gas," van Zyl said.
QAL, which on Monday signed a 15-year contract with power and
gas retailer Origin Energy for 180 petajoules of coal
seam gas from late 2006, currently consumes 16 petajoules of gas
a year.
Queensland Alumina Ltd Gladstone refinery is 20-percent-owned
by French aluminium group Pechiney SA . Rival Rio Tinto
Ltd/plc has 39 percent, Alcan 21 percent and
U.S.-based Kaiser Aluminium Corp 20 percent.
Any QAL contract would follow a major setback for the PNG
project last December when its cornerstone customer, the
Australian Gas Light Co , bailed out in favour of gas
from local fields saying they met an aim to secure supplies at a
competitive price.
The six trillion cubic feet of gas reserves in the PNG fields
face tough competition from local supplies such as those in the
Gippsland and Cooper basins as well as those in the Timor Sea.
Other stakeholders in the PNG project are Nippon Oil Corp
<5001.T> unit Nippon Oil Exploration Ltd and the Mineral
Resources Development Co, which represents landowners.
Oilsearch shares recovered from an intraday low of A$1 on
Tuesday to trade up 1.92 percent at A$1.06 by early afternoon.
The broader market was up 0.86 percent.
($1=A$1.39)
((Reporting by Joanne Collins, editing by William Willitts;
[email protected]; Reuters Messaging:
[email protected]; +613 9286 1435))