BRISBANE, Australia (CP) -- Alcan Inc. has announced a tentative agreement with the proposed Papua New Guinea gas project led by ExxonMobil for a 20-year supply of natural gas for the Gove alumina refinery in Australia's Northern Territory.
Alcan's gas demand ''is expected to significantly increase the prospects that the project will proceed,'' the Canadian aluminum maker said Tuesday.
The agreement follows the dissolution of a gas supply agreement with the Blacktip Joint Venture early this week after Blacktip, developing gas in the Timor Sea, imposed a substantial price increase.
The supply of 43.5 petajoules per year from the Papua New Guinea project ''on commercial terms'' is to begin in 2009, Alcan [TSX:AL] said.
''The supply of natural gas to Gove will replace imported oil as the primary energy source for the Gove refinery and, when combined with the refinery's ongoing expansion to 3.8 million tonnes, will provide Alcan with an overall alumina production cost well below world average,'' stated Richard Yank, president of Pacific operations for Alcan Bauxite and Alumina.
ExxonMobil's Esso Highlands Ltd. is the operator of the PNG gas project, whose other participants are Nippon Oil Exploration Ltd. and Oil Search MRDC, a Papua New Guinea company representing landowner interests.
In addition to Alcan's demand, the project would serve the Australian east coast through a major gas pipeline.
(c) The Canadian Press 2005
