Barry FitzGerald – The Timor Sea has continued to grow in importance for the Adelaide-based and Cooper Basin-dependent Santos, with the group yesterday becoming the managing partner in the big but undeveloped Evans Shoal gasfield.

Santos (40 per cent) takes over from Shell (50 per cent) as operator of the field (Japan's Osaka Gas owns the remaining 10 per cent). The potential for the gasfield to support a $2.5 billion methanol project is one of the options being considered.

The listed Methanol Australia, owned 17 per cent by Santos, is leading the methanol study, which envisages barge-loaded methanol plants being "parked" in the shallow waters of the remote Tassie Shoal, with first sales to the petrochemical market possible by 2007.

The public exhibition of the Tassie Shoal environmental impact statement is due to conclude on July 15. The EIS seeks approval to build and operate two 5000 tonne-a-day methanol plants on the shoal, which lies in Australian waters.

Santos managing director John Ellice-Flint said yesterday that converting the stranded gas at Evans Shoal into a commercial project would contribute towards the group's "strategy of diversification through increased exposure to overseas and international markets".

Evans Shoal lies in permit NT/P 48, 300 kilometres north of Darwin, and was discovered in 1988. Recoverable reserves have been estimated at 6.6 trillion cubic feet of gas and 31 million barrels of condensate (light oil).

Santos is already strongly represented in the Timor Sea through its interest in the Bayu/ Undan oil and gas project, as well as the undeveloped Tern and Petrel fields.

Development prospects for the latter two have improved because of Bayu/Undan development with its planned pipeline to shore.