Nigel Wilson – Negotiations are going ahead on the terms that will secure long-term gas supplies for Bayu Undan's $1.8 billion liquefied natural gas plant planned for Darwin.

The talks involving officials from the East Timor and Australian governments and the Bayu Undan partners, including ConocoPhillips and Santos, are aimed at a new production-sharing contract covering the gas phase of the Timor Sea project.

Similar talks are taking place over a production-sharing contract for the Kuda Tasi and Jahal reservoirs Woodside hopes to bring into production soon to help overcome the impact on its earnings of the decline in production from the nearby Laminaria/Corallina oil fields.

The existing Bayu Undan production-sharing contract covers plans for dividing up revenue from the oil that will be stripped from Bayu Undan gas through the project being built about 500km from Darwin and 250km south of East Timor.

The reservoirs which lie in the Timor Seas Joint Petroleum Development Area were discovered in 1995 contain up to 400 million barrels of liquids and 3.4 trillion cubic feet of gas.

ConocoPhillips inter national chief executive, Jim Mulva, said in Darwin earlier this month it hoped to begin site works for the LNG plant before the end of Apirl.

ConocoPhillips has signed contracts to supply LNG to Tokyo Gas and Tokyo Electric Power Co under 17-year contracts that require shipments to begin in 2006.

East Timor officials said yesterday they believed there was nothing in the PSC negotiations that would halt ConocoPhillips from going ahead with its gas project.

The plant planned for a site at Wickham Point opposite Darwin's residential area will be linked to the Bayu Undan facilities by a $1 billion pipeline.