"At the moment we have a number of options on the table and I can't say whether one is rated above the other, except to say that we are in negotiations with all potential suppliers," said Alcan project director David Sutherland.

Alcan's operation currently buys fuel oil from the Middle East but is looking for a supplier to source 40 petajoules per year of gas from 2007 to power its planned $1.5 billion site expansion.

The company yesterday announced it would conduct an environmental assessment and definitive feasibility study on the expansion, which would increase the production capacity at the operation from 2 million to 3.5 million tonnes per year.

One likely source of gas would be the $6 billion PNG Gas project, currently struggling to sign enough customers to make the project viable. The project partners suffered a shock late last year when AGL decided to buy $2 billion worth of gas from traditional Australian suppliers.