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Gas agreement has potential to create major new petrochemical industry in top end

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6 March 2000             00/55

Gas agreement has potential to create major NEW petrochemical industry IN TOP END  The Minister for Industry, Science and Resources, Senator Nick Minchin, welcomed today's announcement by Shell Development Australia, Woodside Energy and Methanex Corporation on the signing of a letter of intent to provide gas for a major new methanol and synthesis gas (syngas) generation facility in Darwin. 

"The total investment in gas field development, gas infrastructure and the Methanex plant would represent over $4 billion in new investment, which would establish Darwin and the Territory as a new centre of energy-based industry" Senator Minchin said. 

"This announcement clearly demonstrates Australia's global competitiveness in energy resources. The project could stimulate a major new petrochemical industry in the Territory which offers access to the resurgent Asian markets. 

"It would make available a major new source of competitively priced energy for industry in Darwin and possibly north west Queensland and beyond." 

Canadian-based Methanex Corporation is the world's largest producer and marketer of methanol, with plants in Chile, Canada, the United States and New Zealand. The group's global operations generate sales of more than US$1 billion annually. 

Shell and Woodside are seeking to develop major natural gas reserves in the Timor Sea and a pipeline to deliver gas to domestic customers in the Northern Territory and, potentially to eastern Australia. The companies are already in discussion with other potential gas customers in the NT. 

Methanex's proposal involves establishing a 3 million tonnes per annum methanol plant. Estimated capital expenditure for the project exceeds $1.5 billion and export revenue is anticipated to be nearly $700 million. 

The anticipated start up date of the plant is 2005, and the parties have signed a letter of intent specifying the key commercial terms for the supply of approximately 110 petajoules of natural gas per year to the Methanex plant. 

"The Methanex project has the potential to deliver large, long-term economic and tax revenue benefits to Australia", Senator Minchin said. 

"The Government is keen to see Methanex make a formal commitment to the project. I have asked Invest Australia to work closely with the proponents to facilitate this major investment prospect." 

"There are also significant opportunities to attract other petrochemical industries to the same location as the methanol plant." 

Senator Minchin said the Methanex project would be a foundation customer for the Northern Australia Gas Venture (NAGV) gas. NAGV, a partnership between Shell Development Australia and Woodside Energy Ltd, holds substantial interests in a number of discovered and potential gas fields in the Timor Sea. 

NAGV plans to construct a $2.5 billion gas production facility in the Timor Sea and a 500 kilometre long pipeline to Darwin.  

Contact: Kate Harvey, Senator Minchin's office, 02 6277 7580

             Dan Steiner, Department of Industry, Science and Resources, 02 6213 7532