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Bloomberg: ConocoPhillips Sells Extra Darwin LNG Output to Japan (Update2)

By Angela Macdonald-Smith

May 30 (Bloomberg) — ConocoPhillips, the second-biggest U.S. refiner, will today ship the first extra cargo from its Northern Australian liquefied natural gas venture in addition to its contracted deliveries.

The cargo, which is due to leave Darwin about 6 p.m. in the 135,000 cubic meter `LNG Pioneer’ tanker, will be delivered to the existing customers of the plant, Tokyo Electric Power Co. and Tokyo Gas Co., Dirk Faveere, operations manager at the facility, said. One cargo is shipped about every six to seven days, he said.

“At the moment all our gas is contracted to those buyers if they can take it,” George Manning, Darwin area manager at ConocoPhillips, told reporters during a visit by Asia-Pacific Economic Cooperation energy ministers to the plant. He said output at the plant was two cargoes ahead of schedule this year.

ConocoPhillips, based in Houston, started production at the 3.3 million tons-a-year Darwin plant in the first quarter last year and is seeking more gas off northern Australia to supply a potential expansion. The site at Darwin has approvals for as much as 10 million tons a year of LNG production capacity.

“ConocoPhillips is looking for further opportunities to expand the operation of this plant,” Australian Industry Minister Ian Macfarlane said. “As soon as they possibly can they will” expand the project, he said.

The Darwin LNG venture includes Eni SpA, Santos Ltd., Inpex Holdings Inc. and the two Japanese LNG customers.

Second Unit

A second LNG production unit at the site may have capacity of between 3.5 million and 6 million tons a year and may start up in 2012-2013, Adelaide-based Santos, Australia’s third-biggest oil and gas producer, said last month.

Australian LNG export earnings are estimated by the government’s commodities forecaster to jump to A$8.5 billion ($7 billion) in the year ending June 30, 2012, from an estimated A$5.4 billion this financial year, as new projects start up. Australia has more than A$50 billion of proposed LNG projects, led by companies including Woodside Petroleum Ltd., Chevron Corp. and Inpex.

Australia is aiming to become the world’s second- or third- biggest LNG producer, after Qatar, and possibly Nigeria, Macfarlane said today. Delays to the development of Australian LNG projects are “a concern” and are mostly due to the shortage of manpower and delays in environmental approvals, particularly in the case of Chevron’s proposed $10 billion-plus Gorgon project in Western Australia, he said.

Sunrise Project

Woodside’s proposed Sunrise LNG project, off northern Australia, “will go ahead” once the partners reach an agreement on where the gas will be processed, Macfarlane said. The Sunrise partners, which include ConocoPhillips, Royal Dutch Shell Plc and Osaka Gas Co., have agreed to a request from the East Timor government that an independent review is carried out to assess the ability of the gas to be processed in East Timor rather than Australia, he said.

The Sunrise gas field straddles a boundary between Australian waters and an area jointly administered by East Timor and Australia. Development options include an expansion of the Darwin plant, Woodside says on its Web site.

The delay to Sunrise due to an earlier lack of agreement between East Timor and Australia on the administration of the project means the venture has “lost its place” in the queue of proposed LNG projects in Australia, which includes Woodside’s Pluto and Browse projects and Gorgon, Macfarlane said.

To contact the reporter on this story: Angela Macdonald-Smith through the Sydney newsroom at

[email protected]

Last Updated: May 30, 2007 02:41 EDT

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