By Angela Macdonald-Smith
July 16 (Bloomberg) — Royal Dutch Shell Plc, Europe’s largest oil company, and Australia’s Nexus Energy Ltd. will start drilling a well by early September to test a gas and condensates discovery off northern Australia after signing a venture accord.
Shell made an upfront payment of $5 million to Melbourne- based Nexus and will fund the first $30 million of the Fossetmaker-1 well, Nexus said today in a statement to the Australian Stock Exchange. Shell may also pay $25 million to fund a second well to earn a 34 percent stake in the WA-377-P permit area in the Browse Basin, it said.
The partners agreed a $55 million deal in October to appraise the Echuca Shoals field, which may supply fuel for a liquefied natural gas project. The field lies to the south of Inpex Holdings Inc.’s proposed Ichthys LNG project and southeast of the fields that will supply Woodside Petroleum Ltd.’s Browse project, in which Shell is a partner.
“If Echuca Shoals proves to be a large gas accumulation Nexus believes it is ideally located in an area of the Browse Basin which is quickly becoming a regional focus for LNG developments,” Nexus said in the statement.
Shares in Nexus gained 13 cents, or 8.3 percent, to A$1.69, a record close. Nexus earlier this month raised A$35 million selling shares to Norway’s Viking Shipping Co., which will supply a production ship for the Australian company’s proposed Crux gas liquids project, also off the northwestern coast.
Should Echuca Shoals prove to be too small for LNG production, yet hold gas that is rich in liquids, the field may be suitable for a liquids project similar to Crux, Nexus said.
To contact the reporter on this story: Angela Macdonald-Smith in Sydney at [email protected] .
Last Updated: July 16, 2007 02:28 EDT
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