BHP Completes Phase I of the Zamzama Development Project

BHP Billiton has made the first contractual gas deliveries to customers from the Zamzama Phase I Development in Sindh Province, Pakistan. Phase I was commissioned nearly four months ahead of schedule and is forecast to be under the original US$106 million budget (BHP Billiton share US$40 million).

Approved in March 2002, Phase I will quadruple the current gas processing capacity enabling the contractual supply of up to 320 million standard cubic feet per day (MMcf/d) of gas to Sui Southern Gas Company Limited (SSGCL) and Sui Northern Gas Pipelines Limited (SNGPL).

Philip Aiken, President and CEO of BHP Billiton Petroleum, said: "The Zamzama development came in ahead of schedule and is expected to surpass its financial target. The fact that this was achieved with an outstanding Health, Safety, Environment and Community record is a first class performance. This success will provide long-term benefit to all stakeholders and will enable us to continue our positive association with the people and Government of Pakistan. This BHP Billiton operated development is an example of a project delivered within our gas commercialisation strategy. It provides us with a solid platform for growth in the country."

BHP Petroleum (Pakistan) Pty Ltd has a 38.50 per cent interest in the Zamzama field and is operator, with partners Government Holdings (Private) Ltd – 25.00 per cent, PKP Exploration Ltd (a jointly owned company between Kufpec and Premier Oil) – 18.75 per cent, and ENI Pakistan (M) Ltd (formerly Lasmo (MP) Limited) – 17.75 per cent.

Gas Sales and Purchase agreements with SSGCL and SNGPL cover the supply of gas up to 320MMcf/d of gas over the expected field life of 20 years. The core area of the Zamzama field has estimated proven and probable reserves of 1.7 trillion cubic feet (Tcf) of which BHP Billiton's share is around 650 billion cubic feet (Bcf).

Three new development wells (Zamzama-3, -4, and –5) were drilled during this phase of development and are tied into two new processing trains with a nameplate capacity of 140MMcf/d each. The existing Zamzama Extended Well Test (EWT) processing train with a proven capacity of 100MMcf/d is being integrated into Phase I giving a total plant throughput capacity of at least 380MMcf/d. A fourth well (Zamzama North) designed to further appraise the field is also nearing completion. First production from the Zamzama field commenced in March 2001 via the EWT which was fed by two wells (Zamzama-1 and –2). It has supplied on average 100 MMcf/d of gas to Sui Southern Gas Company under a 21 month contract.

During project execution BHP Billiton utilised local capabilities wherever possible and encouraged local participation. Some 3,275 workers were employed at the Zamzama site during the peak of construction activities, with about 40% of them coming from the local area representing a major employment opportunity for the communities living around the plant site. On average, about 2,000 local workers were employed at the Zamzama plant site over the total construction period of 14 months. A significant proportion of the major plant equipment was also built in local fabrication yards. It is estimated that the total Pakistani content stands at about 34% of the budget for the gas processing plant and associated facilities.