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BP To Sell Gas To Shell, Purchase Gorgon Project LNG

THE WALL STREET JOURNAL 

MAY 29, 2009, 2:46 A.M. ET

By Ross Kelly

Of DOW JONES NEWSWIRES

SYDNEY (Dow Jones)–BP PLC (BP.LN) Friday said it has agreed to sell gas to Royal Dutch Shell PLC (RDSB.LN) and purchase it as liquefied natural gas after it has been processed through the Gorgon LNG project in Western Australia state.

The deal shows BP, which is already a 16.7% holder in Australia’s massive North West Shelf LNG joint venture, is keen to use its Australian gas interests to add to its Australian LNG export capabilities.

The proposed Gorgon LNG project is operated by Chevron Corp. (CVX) and also counts Shell and ExxonMobil Corp. (XOM) as shareholders.

BP said it and the Gorgon joint venture partners have agreed to merge the Io and Jansz gas fields offshore Western Australia into a single unit. The fields will be developed via the Gorgon project, BP said.

BP has a 12.5% interest in the Io field, with the Gorgon partners holding the rest. It doesn’t have an interest in the Jansz field.

A BP spokesman declined to comment on how much equity BP will hold in the combined fields.

Chevron in 2003 said appraisal drilling indicated that the Jansz field, including the adjacent Io block, contains about 20 trillion cubic feet of recoverable natural gas.

-By Ross Kelly, Dow Jones Newswires; 61-2-8235-2957; [email protected]

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