Negotiations on Gorgon gas project under way

7/9/95

The Western Australian Government is currently negotiating in good faith with the North West Shelf Joint Venture participants as well as the joint venture participants involved with the Gorgon project to expand the State's liquefied natural gas industry.

Resources Development Minister Colin Barnett said the Government did not have any particular preference about whether the LNG expansion was based on an entirely new project, such as West Australian Petroleum's (WAPET's) Gorgon project, or an expansion of the existing facilities on the Burrup Peninsula, as proposed by Woodside.

The participants in the Gorgon project are currently considering a range of options which include new LNG facilities being located on either Barrow Island, North West Cape or the Burrup Peninsula.

The Burrup Peninsula also offers an option of integration with Woodside's North West Shelf facilities and could result in at least two additional LNG trains being located within the existing plant site.

The Minister said Shell, a participant in both the North West Shelf and Gorgon projects, had publicly supported an integrated expansion.

In addition, the North West Shelf participants are also considering an expansion of existing facilities to extend its operations with at least another two trains.

The Minister said high-level corporate negotiations were currently taking place between the participants of the proposed projects.

Mr Barnett said that despite WA's large gas resource (about 79 trillion cubic feet), it was likely that only one of the proposed projects (either North West Shelf/or Gorgon or a combination of the two) would come on-stream in time to meet the projected increase in demand for LNG in the Pacific Rim of about six to nine million tonnes per annum, which is expected to occur from about 2001.

The Minister said that during his recent visit to Europe and the United States, he met with senior officials from both Shell and Chevron, and more recently he met with senior representatives from Texaco in Perth.

He said that despite the different views about the ultimate form of expansion, all companies were committed to expanding WA's LNG industry.

Mr Barnett said the State Government would continue to work with the companies to resolve a range of issues such as environmental matters and land access, to clear the way for an expansion of WA's LNG industry to proceed.

He was confident a number of outstanding commercial matters would be resolved within the next six months to enable a firm commitment to be made.

Media contact:  Carolyn Vicars 222 9699