Origin Energy and Partners Launch BassGas Project

Origin Energy and its joint venture partners AWE, CalEnergy and Wandoo Petroleum Mitsui group of companies have invested $750 million over six years developing the Project, which produces gas, condensates and LP Gas from the Yolla gas field situated 147 km off Victoria's southern coast. These products are processed for sale in the onshore processing facilities at Lang Lang, approximately 100 kilometers south east from Melbourne CBD.

The BassGas Project will produce over 20 petajoules of sales gas, 1 million barrels of condensate and 65,000 tonnes of LP Gas per year. Natural gas demand is predicted to more than double in Victoria over the next 20 years and the Yolla field has enough reserves to meet around 10% of current demand for 15 years.

All of the natural gas production from this project will be acquired by Origin Energy under long-term gas contracts. Condensates are being sold to Shell while each JV party is selling its own share of LP Gas production.

Speaking at the official opening today, Origin Energy Managing Director, Mr. Grant King said, "This has been a challenging project to deliver. It has taken a significant effort from Origin as Operator for the Joint Venture, the Joint Venture partners, and many other contractors, consultants and suppliers who have worked on this project to reach the stage where endurance testing is nearly complete and production has recently achieved contractual levels.

"We would like to thank all people involved in the project for their efforts.

Commenting on the significance of this project to Origin Energy, Mr. King added, "The strength of Origin's gas retailing business in south eastern Australia underpins Origin's purchase of the natural gas produced from this facility. It was a key factor in the commercial development of this project. Origin has a 42.5% interest in this project and the commencement of production continues to deepen the integration in Origin's business.

"We have also learnt from the development of this project and this has allowed Origin to significantly enhance the skills and resources available to the Company as we pursue additional projects across our business.

"We now look forward to the completion of the offshore Otway Project which will add further strength to Origin's competitive position in Victoria" Mr. King said.

Mr. Bruce Phillips, Managing Director of AWE, said "AWE's engineers played a key role in establishing the initial commercial viability of the BassGas Project and accordingly, we are pleased the project has progressed to production after a difficult construction phase.

"AWE has made a big commitment to the development of new gas resources in south east Australia as a major participant in both the BassGas project in the Bass Basin and the Casino gas project in the Otway Basin. AWE is now producing gas, LP Gas and condensate for sale into Victoria's western and eastern regional markets from two separate sedimentary basins," Mr. Phillips said.

In the past five years, AWE has spent A$280 million on petroleum exploration and development projects offshore Victoria and has been a major proponent of increased competition in the supply of natural gas and LP Gas for the region.

The BassGas Project is a Joint Venture partnership between:

Origin Energy Resources Limited* 37.5% (Operator)
Origin Energy Northwest Limited* 5.0%
AWE Petroleum Pty Ltd** 30.0%
CalEnergy Gas (Australia) Limited 15.0%
Wandoo Petroleum Pty Ltd# 12.5%

*a wholly owned subsidiary of Origin Energy Limited
**a wholly owned subsidiary of Australian Worldwide Exploration Limited
# an affiliate of Mitsui & Co., Ltd