Santos Delays Henry Gas Project as Vessel Unavailable

By Angela Macdonald-Smith

Jan. 8 (Bloomberg) -- Santos Ltd., Australia’s third-biggest oil and gas producer, will delay the start of the A$275 million ($196 million) Henry gas project off the southeast coast because of the unavailability of a vessel to install a pipeline.

Santos, the venture operator, advised that the pipe-laying ship is now not available to install the line in the first half of 2009, Sydney-based Australian Worldwide Exploration Ltd., a partner, said today in a statement to the Australian stock exchange. That means the Henry and Netherby discoveries won’t be able to be connected to the Casino field by mid-year, it said.

The start-up of the two Otway Basin fields will allow the venture, which includes Mitsui & Co., to expand sales to meet rising energy demand in Australia’s most-populous southeastern states. The gas is due to be delivered to CLP Holdings Ltd.’s TRUenergy Pty retailing and power generation unit.

The pipe-laying contractor has offered to carry out the work “in the next weather window, with mobilization in late 2009,” Australian Worldwide said in the statement. It didn’t give a revised start-up date for the project.

Adelaide-based Santos, which owns 50 percent of the Henry project, dropped as much as 50 cents, or 3.3 percent, to A$14.71 in Sydney trading, while Australian Worldwide, a 25 percent partner, fell as much as 5 percent to A$2.64. The moves compared with a decline of as much as 4 percent in the exchange’s benchmark energy index after crude-oil prices fell in New York.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net