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Bayu-Undan Gas Development to Proceed

Bayu Undan Gas Development to Proceed Following Signing of Heads of Agreement for LNG Sales

Darwin LNG Pty Ltd an affiliate of Phillips Petroleum (91-12) Pty Ltd the Operator of the Bayu-Undan development project has signed a Heads of Agreement with Tokyo Electric Power Company, Incorporated and Tokyo Gas Co., Ltd that will enable the gas development of the Bayu Undan project in the Timor Sea.

Santos is encouraged by the announcement that Tokyo Electric Power Company and Tokyo Gas Co have both signed a Heads of Agreement to take 3 million tonnes per annum (approx 26 million boe) of LNG from the Bayu Undan project for a 17 year period from 2006.
This commits nearly 100% of the Bayu Undan project’s estimated gas reserves towards the LNG project.

Development of the LNG project cannot proceed until the operator has received the endorsement of the Australian Government for the fiscal regime that was agreed 21 December 2001 with East Timor.

Development of Bayu-Undan gas reserves along with other Timor Sea gas resources remains a high priority for Santos. Santos’ other interests in the Timor Sea include a 40% interest in Evans Shoal and an approximate 95% interest in Petrel/Tern.