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INPEX announcement of 'Ichthys Project': speech.



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Minister for Resources and Energy, Minister for Tourism

INPEX Announcement 'Ichthys Project' Good morning ladies and gentlemen,

It’s a pleasure to be here today with Inpex President, Mr Kuroda, his senior management team, the Premier of the Northern Territory, my parliamentary colleagues, and guests.

Australia has been an important LNG supplier for a quarter of a century.

But despite growing international demand, particularly on our doorstep in the Asia-Pacific, we still only have two LNG projects in operation - the Woodside-operated North West Shelf Project and ConocoPhillips Darwin LNG plant.

In 2007, those two projects exported 15.2 million tonnes of LNG worth A$5.5 billion to Japan, China and South Korea.

Australia is the third largest LNG exporter in the Asia Pacific region and the fifth largest in the world.

And we have huge potential to be much bigger if we can together address the challenges facing us today.

The LNG industry no longer appears confined to the northwest of the continent.

From almost nothing only five years ago, Queensland’s coal seam methane supplies more than 18 per cent of eastern Australian gas supplies and is now of enormous interest for LNG as well.

There is no shortage of gas resources in Australia - currently estimated at nearly 160 trillion cubic feet.

We can - and we will - support strong domestic gas supply as well as exports.

A third project - the Pluto project also in the North West Shel

f region - is currently under

construction.

The Gorgon project in Western Australia is also well into front end engineering and design, and hopefully that will come to fruition in the not too distant future.

What is important to me is that Australia gets more LNG projects built to unlock the wealth from our vast, remote gas resources for the benefit of all Australians.

And therefore I am pleased that Inpex has taken the decision today on a preferred site here in Darwin

The Hon Martin Ferguson AM MP

The H

on Martin Ferguson AM MP

26 Sep 2008

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for an LNG plant utilising gas from the Ichthys field in Western Australia.

This decision means Inpex will proceed with environmental approvals and front-end engineering and design with a view to making a final investment decision in late 2009 or early 2010.

This is a commercial decision that the company believes will provide greater certainty to meet its LNG delivery timetable than other options.

It is also a great decision for the Northern Territory, providing job and business opportunities for Territorians, and contributing to the long-term sustainability of the NT economy.

I know the decision will be disappointing for Western Australia however I am confident that state will still reap substantial benefits from this development, including production facilities offshore in the Browse Basin.

At the same time, I am the State of Western Australia and stakeholders in the Kimberley region will be even more determined to work together to get a Kimberley LNG site investment-ready as soon as possible.

There is nothing wrong with a bit of competitive tension between investment locations to keep governments on their toes!

I might add that it is good to see companies leaving their options open and being creative with the commercial and physical possibilities to bring these difficult gas projects to fruition in a profitable and sustainable way.

Public policy can drive the industry to some extent, but innovation by the industry itself is vital to its success and will provide the best outcomes for Australia.

That is why I also welcome the proper consideration of new technologies such as floating LNG, subject to all the appropriate environmental, economic, and safety considerations.

The proposed hub concept in the Kimberley is also a new innovation that will need the cooperation of all the stakeholders to make it a success.

The success of Northern Australia’s petroleum industry is also tied to the success of our neighbour, East Timor.

I welcome the commencement of the Timor-Leste National Petroleum Authority back in July this year.

The job of the NPA is now to work towards a Sunrise LNG project - whether located in Darwin, East Timor or as a floating facility - so that the East Timorese can reap the financial benefits for the development of health, education, and transport infrastructure in their young nation.

Today, however, marks a milestone towards the development of a fourth possible LNG plant for Australia here in Darwin, using gas from the Ichthys field in Western Australia.

With Darwin’s harbour and support facilities, the support of the Northern Territory Government, and its existing LNG industry and skilled workforce I am sure this project will be a resounding success.

I would like to take this opportunity to thank President Kuroda of INPEX for his kind invitation to be with him today in Darwin.

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INPEX and your partner, Total, must be proud of the progress you have made in bringing the Ichthys Project an important step closer to reality.

The Ichthys project is the first of the Browse Basin gas developments to get underway.

The Browse is proving to be just as prospective as the Carnarvon Basin has been - and continues to be.

The Ichthys field alone is estimated to have almost 13 trillion feet of gas and more than 500 million barrels of condensate.

The Ichthys condensate reserves are the biggest oil accumulation found in Australia since the Bass Strait fields back in the 1960s.

In this context, this project also has the potential to play an important role in Australia’s future oil security.

Through LNG exports we will also play a vital role in the energy security of our neighbours in the Asia Pacific - our old friends, Japan who have been with us from the very beginnings of this industry in Australia, and new growth economies such as Korea, China, Taiwan, and India.

Japan is Australia’s largest LNG customer taking the lion's share of the 15.2 million tonnes that Australia exported in 2007.

LNG is also part of the solution to climate change for our region.

For every tonne of CO2 produced here in Australia from LNG production we save between four and nine tonnes in the Asia region.

Finally, I am encouraging INPEX and the oil and gas industry to work cooperatively with Indigenous Australians and the Australian Government to address Indigenous disadvantage and help Indigenous Australians share in the economic prosperity of these resource projects.

I would especially encourage the venture partners to work to provide meaningful training opportunities and real jobs for Indigenous people - whether in support of production activities in the Kimberley or construction and operational activities here in Darwin.

I wish the project every success and thank you for the opportunity to be here today.

Thank you.

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