The participation in the field is via the acquisition of shares of Phillips Petroleum Timor Sea Inc. (PPTSI), which indirectly owns a 10.08% interest in the field, by TEPCO and Tokyo Gas in the ratio of two to one. As announced on March 12, 2002, a Share Sale & Purchase Agreement was agreed upon in the same month, and the acquisition was to be completed only after fulfilling certain conditions including necessary approvals from the relevant authorities regarding a gas development plan.
Following the grant of formal approval for the Gas Development Plan from the Designated Authority on June 13, 2003, TEPCO and Tokyo Gas completed the acquisition of PPTSI on June 27 and changed the company name to Tokyo Timor Sea Resources Inc. Furthermore, in separate transactions, TEPCO and Tokyo Gas completed arrangements to participate in the pipeline to be laid from the field to near Darwin, and in the LNG Plant project to be constructed near Darwin, by using newly established subsidiaries of each company, namely TEPCO Darwin LNG Pty Ltd, and Tokyo Gas Darwin LNG Pty Ltd.
The Bayu-Undan field is located 500 kilometers offshore from Darwin, and 250 kilometers off the south coast of Timor Leste. In addition to 3.4 trillion cubic feet of natural gas (equivalent of approx. 80 million tons of LNG), the field has reserves of about 400 million barrels of condensate and LPG. The condensate and LPG are to be shipped from an offshore facility for sale from 1Q 2004. The LNG is to be shipped from Darwin for sale to TEPCO (2 million tons /yr) and Tokyo Gas (1 million tons /yr) from 1Q 2006.
Through this participation, TEPCO and Tokyo Gas will have a direct involvement in the development and production of gas for power generation and city gas feedstocks. Combined with the LNG transportation business using their own LNG ships, both companies will be able to participate in the entire LNG chain: gas production, pipeline transportation, liquefaction, marketing, shipping and consumption of LNG in power generation and gas distribution. They believe the participation in the LNG business chain will secure a stable and economic supply of the fuel and city gas feedstocks.
TEPCO and Tokyo Gas, as pioneers of LNG introduction in Japan, will make every effort to make a successful project to create a new paradigm for LNG, together with the relevant governmental authorities of Timor-Leste and Australia, local governments and authorities, ConocoPhillips, and other project participants including ENI of Italy, Santos of Australia, and Inpex of Japan.
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