Bmg Joint Venture To Lease $418m Production Facility
The Age
Tuesday July 8, 2008
HIGH oil prices have prompted the Basker/Manta/Gummy (BMG) oil and gas joint venture in Bass Strait to bring forward a $1.23 billion investment in upgrading its production facilities. Another $US400 million ($A418 million) will be invested by BW Offshore on a purpose-built floating production, storage and offload facility (FPSO) that the BMG joint venture will lease for an initial five years, with an option for a total of 15 years. The BMG project currently involves the use of a mini-FPSO and a separate shuttle tanker. The new FPSO will have the capacity to handle oil, gas and water at greater rates than the current set-up can. But even with the bigger facility, the BMG project's new expected oil production rate of 20,000 barrels a day will still be well short of initial expectations from even the innovative mini-FPSO and shuttle tanker set-up. Not that it matters much, given that oil prices are more than double the level on which the original project would have been based. Beach Petroleum is a 30% partner in the project, having sold down from an original 50% stake to de-risk its exposure and capitalise on fancy valuations for oil assets in the high-oil-price environment. Beach managing director Reg Nelson said yesterday that the commitment to the expanded project was great news. "The new FPSO will allow us to increase oil production and also give us the chance to look much more closely at developing the natural gas part of the project," he said. "It also allows us to seriously look at the upside to the project through the potential development of additional resources to the north of the existing production in the Manta and Chimaera fields," Mr Nelson said. Mr Nelson said a vessel had been identified and it was expected that it would take about 18 months to complete its conversion for use in Bass Strait. Anzon Australia is the 40% partner and operator. Sojitz Energy holds 10% and CIECO holds the remaining 20%. Anzon is the subject of a takeover offer from Roc Oil. Melbourne-based Nexus planned to bid for Anzon but pulled out after drilling results at the BMG project cast some doubt on the project's recoverable reserves. Anzon closed 3 lower at $1.30 and Beach was 0.5 a share weaker at $1.225. Both stocks were down in what was a generally weaker day for oil and gas stocks.
© 2008 The Age