Queensland Gas Acquires Stake in Two Blocks in ATP-643-P

Queensland Gas Company is on target to become a major Queensland gas supplier, after reaching two separate agreements with CS Energy and BHP Billiton.

In the first agreement, CS Energy will become a joint venture partner with QGC, investing up to $5 million to earn a 50% interest in the two key blocks of ATP-632-P including the Berwyndale South gas field.

In the second agreement, QGC, CS Energy and BHP have entered into a Memorandum of Understanding, whereby BHP may step in as the joint venture partner with QGC, with responsibility for technical development and gas marketing. Under this arrangement, CS Energy would remain a major customer, preserving current and projected gas supply arrangements.

QGC Managing Director Richard Cottee said these agreements are a major development for the Company and a significant show of confidence in QGC's future.

"We have effectively secured funding for the remainder of the reserves certification program and the commercialization of our Berwyndale South field. This means we are on target to supply gas to CS Energy and the growing Queensland gas market in 2005.

"Importantly, regardless of whether CS Energy or BHP becomes our long term partner, QGC will retain at least a 50% interest in ATP-632-P.

"The major benefits to QGC are that CS Energy would remain a major gas customer and BHP would bring a wealth of experience in the petroleum and coal industries, coupled with exposure in coalbed methane and its undoubted gas marketing experience in these areas. QGC will be poised to deliver its promise of new gas contracts each year," Mr Cottee said.

Under the terms of the CS Energy farm-in agreement, up to $4.5 million will fund QGC's share of future expenditure on ATP-632-P, including reserves certification. This agreement is subject to the parties making the necessary amendments to the existing Gas Sales Agreement to reflect the new joint venture arrangement.