LNG on track for earnings Business Breaking News 24/7 - NEWS.com.au (20-01-2006)

LIQUEFIED natural gas was yesterday on track to become the nation's second-largest commodity export behind coal with a series of sales and production developments that would lift annual sales beyond $15 billion by the middle of next decade.Tokyo-listed Inpex disclosed to The Australian it was planning a multi-billion-dollar export LNG development of its Browse Basin gas reserves north of Broome in Western Australia, while energy giant Shell confirmed it had negotiated the first sales of Australian LNG to India - to be supplied by its quarter stake in the $11 billion, Chevron-operated Gorgon project.
Inpex general manager Australia Shinsuke Ban told The Australian the company was confident enough in its Browse Basin reserves to be planning a world-scale LNG project which would be operating "early next decade".
This would compete directly with Woodside's plans - already announced - to develop an 8-million-tonnes-a-year project in the same area based on its Breaknock and Scott Reef discoveries, which is being marketed in North Asia to be in production between 2011 and 2014.

Separately, Woodside, which also operates the $16 billion North West Shelf gas project - the only producing LNG development in Australia, with an annual capacity of 16.9 million tonnes - confirmed its long-awaited proposal for a floating LNG receival terminal off California as it reported a 31 per cent increase in December sales to $759 million.
The surge in LNG interest comes as crude oil stays above $US65 a barrel and Japan aggressively pursues energy security in the face of rapidly expanding Chinese demand for energy.

Between March 2000 and February 2001, Inpex drilled three successful wildcat wells at its Ichthys reservoir, about 450km north of Broome, that flowed between 21.3 million and 40.6 million cubic feet a day of gas and between 292 and 2305 barrels a day of condensate.
Mr Ban declined to provide a new estimate for the reservoir - Inpex is still evaluating drilling results and the official statistics are expected to be released in about three months - but said the reserves were substantially above the officially reported 6 trillion cubic feet of gas and 230 million barrels of condensate.
Inpex has previously declined to discuss its plans for Ichthys, but Mr Ban said yesterday it was considering a number of options including the possibility of placing an LNG processing plant on an island in the Bonaparte Archipelago east of the reservoirs which would could cut 250km off a pipeline to shore compared with Broome. Mr Ban said the size of the plant would depend on the contracts that Inpex could secure but added it would be world-competitive.
The Inpex proposal takes to eight the number of existing and planned LNG projects in Australia that could be operating early next decade, with a total capacity of more than 50 million tonnes.
On current estimates, this would be worth at least $15 billion in annual earnings. That would challenge iron ore exports, which hit about $6 billion in 2004-05 but are expected to leap to about $14 billion in the current financial year because of soaring prices. Coal exports are tipped to reach $25 billion in 2005-06.
Shell Development Australia confirmed that parent Royal Dutch Shell and French-based Total had negotiated a contract for 2 million tonnes a year of LNG to the Gujerat State Petroleum Corp in India. Part of the deal is that 500,000 tonnes a year of the contract will come from Shell's quarter of Gorgon.