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Australia steps up hunt for oil
By Geoff Hiscock
SYDNEY, Australia (CNN) -- Australia's biggest energy producers are stepping up their search for new oil and gas deposits, as flows from the country's existing fields begin to ease. Australia supplies about 80 percent of its own petroleum needs, and is starting to win big export contracts for liquefied natural gas from its massive North-West Shelf project off the coast of Western Australia. (Full story) But the other main oil and gas producing fields, some of them dating back to the 1960s, are maturing – hence the push to find new ones. Energy experts say that without fresh discoveries, Australian production will likely fall by 40 percent over the next decade. Offshore oil rigs are moving into Australian waters to continue or begin exploration in areas like the Bass Strait, the northern coast of Western Australia and the Timor Sea north of Darwin. Oil producers BHP Billiton and Santos both released figures on Wednesday showing declines in oil output from their main offshore fields in the Bass Strait and the northern coast of West Australia. BHP, Santos report fallsAlthough Santos reported a 20 percent jump in fourth quarter revenue because of higher oil prices, it said oil production in the three months to December fell 7.6 percent. BHP said its global oil and condensate production for the same quarter dropped 16 percent, in part because of natural declines in its Bass Strait and Laminaria fields in Australia. BHP, Santos and the other major producer, Woodside Petroleum, will spend hundreds of millions of dollars in 2003 on exploration in Australian waters, and in wildcat wells in overseas sites such as the Gulf of Mexico and Algeria. A spokeswoman for BHP Billiton told CNN that deep-water exploration is a focus of the company's petroleum strategy, and nominated the Browse and Beagle basins in Western Australia as part of its program. BHP also expects to complete offshore drilling next month on its Minerva gas site off the Victorian south coast. Santos said it will start a drilling program in March for its Montgomery site in the Carnarvon basin of Western Australia. Late last year it plugged and abandoned a well in another Western Australia prospect, the Barrow basin. Gas contractsThe exploration push comes as the Australian energy producers start to secure more long-term contracts for gas supplies to customers in China, Japan and South Korea. Woodside, operator of the North-West Shelf gas field, last week clinched two key supply deals – a A$1 billion ($580 million) seven-year contract with Korea Gas Corp (Kogas) and a 24-year one with Japan's Shizuoka Gas. Kogas will take 500,000 tons a year from late 2003, while Shizuoka Gas will start taking gas from 2005, peaking at 135,000 tons a year. Those deals, and a mammoth A$25 billion, 25-year contract with China announced in August last year, are seen as enough to underpin a proposed expansion of the North-West Shelf project. (Australia wins huge China deal) Heavy investment expected this yearThe six equal partners in the project – Woodside, BHP Billiton, Shell, BP, Chevron Texaco and Japan Australian LNG (a joint venture between Mitsubishi and Mitsui) – are expected to commit late this year to another A$1 billion of infrastructure, following the go-ahead for a A$2.4 billion fourth LNG production "train". Woodside also said this week it will spend A$93 million ($55 million) on a joint venture exploration program with U.S. producer Pioneer in the Gulf of Mexico. Santos has its own international exploration program, in Papua New Guinea and the United States. It said Wednesday it spent a total A$760 million on exploration and development last year. Shares in Santos closed 0.82 percent lower Wednesday at A$6.05. Woodside eased 0.17 percent to A$11.48 and BHP Billiton was off 0.11 percent to A$9.03. The broader market, measured by the S&P/ASX200, finished 0.43 percent lower at 2,951.7.
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