Santos Ltd., Australia Worldwide Exploration Ltd., and Mitsui & Co. Ltd. received formal authorization to develop the Casino gas field in the Otway basin offshore Victoria, Australia.

Gas production is expected to start in 1Q 2006, subject to normal regulatory approvals. Under a new gas sales agreement, Santos, AWE, and Mitsui have the option to supply SPI Electricity Pty Ltd. (TXU) with up to 420 petajoules (PJ) of gas over 12 years for the Victorian or South Australian markets. This is an exploration-enabling contract in that it caters for the immediate commercialization of future gas discoveries.

The new gas sales agreement is an expansion on the initial gas sales term sheet announced by the joint venture participants in September 2003 for TXU to take 293 PJ of gas. That agreement, which included the option for TXU to purchase or process further gas, was unique in that it commercialized the Casino resource before appraisal drilling had confirmed the quantity of gas available.

Commenting on the announcement, Santos' Managing Director, John Ellice-Flint said: "The Casino discovery and the innovative long-term TXU sales agreement are rewarding developments for the producers' ongoing commitment to build on our expanding energy assets in south-eastern Australia."

The Casino gas project will be the first commercial development within VIC/P44. The field is 30 km offshore Port Campbell in water depths of 70 m. Raw gas from the subsea facilities at the Casino field will be transported to the coastline through a sea-floor pipeline that will come ashore via a directionally-drilled underground shore crossing. Raw gas will then be transported via a buried pipeline to TXU's Iona processing facilities.

Field construction will begin in 1Q 2005.

10/12/04