Indo-Pacific and NGC Enter Agreement for Kahili Gas

Indo-Pacific Energy and its other PEP 38736 joint venture partners are entering into commercial arrangements with NGC Holdings Ltd, whereby a pipeline and pre-treatment facilities will link the Kahili gas discovery into NGC's gas gathering system and the Kapuni gas treatment plant in New Zealand.

The commercial terms of the arrangement have been approved by the Boards of all parties, and subject to finalization of contract, the project will commence. A 7 mile export pipeline will run from the Kahili site to NGC's 24" untreated gas pipeline between the Kapuni plant and Methanex's methanol facility, where a pre-treatment facility will be built to separate and store the condensates (light oils), before injection of the gas stream into the Kapuni pipeline.

NGC will build, own and operate the pipeline and the separation and storage facilities, while Indo-Pacific will remain responsible for operation of the well. NGC will purchase the gas and LPG's at the pre-treatment site, and the PEP 38736 parties will uplift the condensates from that site and transport them to the oil tank farm in New Plymouth, for export and sale. Pipeline construction will commence in the next few months, and the system is expected to be commissioned around end of first quarter, 2004.

NGC is the owner and operator of more than 2,000 miles of high pressure gas transmission line and associated facilities, serving most major cities in North Island, New Zealand. It also owns and operates more than 1,500 miles of low pressure local distribution pipelines, and processes, transports, sells and supplies gas to a wide range of commercial and retail customers. As well as being a major gas and LPG retailer in its own right, it also handles gas transport on behalf of other major gas owners and users, and provides independent metering services to over 800,000 homes and businesses.

Indo-Pacific Energy CEO Dave Bennett said, " We are extremely pleased to have secured an agreement with NGC which will ensure Kahili and any other nearby discoveries can be linked readily to market. This marks a significant step in the positioning of Indo-Pacific as a supplier of gas to national markets, at a time when New Zealand has a pressing need to secure new gas supplies. We look forward to further expanding and developing this relationship with NGC, to mutual and national benefit"

Indo-Pacific is permit operator and holds a total 45% interest in PEP 38736 and the Kahili field, with Tap Oil holding 30% and IRM 25%.