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Austral Concludes Kahili Gas Purchase Arrangements


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Austral Pacific Energy Ltd. announced that final agreements have been executed for the sale of gas from the Kahili gas-condensate field in the onshore Taranaki Basin, New Zealand. The Kahili gas is expected to be available to the market by mid 2004.

Natural Gas Corporation (NGC) will buy all gas produced from the field, for which initial reserve estimates are in the 4 billion cubic feet range. Kahili was discovered in November 2002; and is operated by Austral Pacific Energy, which holds a total 45% interest in the permit. The field will be produced initially from the Kahili-1A/B well; which is expected to commence flow at 3-4 million cubic foot of gas and 120-150 barrels of condensate (light oil) a day.

The reserve estimates are likely to change either up or down after pressure tests following some months of production. At that time, consideration will also be given to drilling a second well and/or 'fraccing' Kahili-1A/B, to enhance production and revenues. 'Fraccing' is a process of hydraulically fracturing a reservoir formation to enhance flow rate of oil or gas from the well.

NGC will construct, own and operate a separation plant to process the raw well stream and install 12 km of pipelines to connect Kahili gas to the existing NGC pipeline infrastructure. Subject to receipt of the necessary planning consents construction of the facilities, at a cost of approximately NZ$8 million to NGC, will commence in February 2004.

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