Analyst Wrap

Its been a remarkable week for the Australian oil and gas industry. Both development options for the Sunrise gas field in the Timor Sea are officially dead in the water, literally and metaphorically.

Woodside told the market today after review of the floating LNG plant option to supply the North American market and the onshore processing plant in Darwin to supply the domestic market option- it found "neither proposal to be viable".

However, Woodside left the door open for the FLNG to become a cost competitive supplier to the Asia-Pacific.

Sunrise's arch rival in becoming a major gas supplier to the Australian market, the $6.8 billion PNG Gas project, is also looking shaky despite some positive noises emanating from the PNG government.

In a classic 'the glass is half-full' message, the PNG government told an investment conference in Sydney this week it has half the volumes necessary to make the project viable and is confident of mopping up the rest by December 19.

However, in a classic 'the glass is half-empty' message, project operator ExxonMobil told the market the "reality is, as we sit today, we do not have sufficient customers for that to happen."

Oil Search shareholders, however, can probably rest a little easier at night after the PNG government said it would not sell its 18% share of the project unless the pipeline went ahead and the share price consequently went up.

In the markets, engineering services outfit Worley Group made a somewhat lucklustre debut on the ASX after its much heralded float. Despite raising nearly $84 million, only about $16 million will make its way to the group.

Junior explorers Empire Oil & Gas and Voyager Energy were busy in the market raising cash for their drilling programs in the Perth Basin.

It was good week for the Bass Straight Oil Trust as it announced an increase in the royalty received for the September quarter. Also in a cheery mood was pipeline owner Envestra, which had its tariff increase approved by Victorian regulators, thus securing good revenue for the next five years.

Amity Oil told the market its Turkish gas sales increased for the third successive month, which caught the eye of Perth brokerage house, DJ Carmichaels, who in turn recommended share investors to buy stock in the Perth-based company.

Out in the field, oil production from the Harriet Joint Venture in the Carnarvon Basin has almost doubled to about 30,000 barrels a day after the completion of the Victorian oilfield development.

Staying in the Carnarvon Basin, Apache Energy is looking to drill the Crackling South Prospect next year after reaching an agreement with junior explorer West Oil to farm into EP-341.

The Victorian government awarded a new onshore Gippsland Basin permit to the Lakes Oil /AusAm Joint Venture. The permit is located strategically below the Loy Yang Power Station.

Coalbed methane player Eastern Star Gas is looking to establish the viability of natural gas production from its extensive brown coals after kicking off the drilling of five Oak Park wells.

In Queensland, the government is looking to unlock the State's massive CBM potential by unveiling Australia's first regulatory framework for this emerging industry, which according to PriceWaterhouseCoopers said the industry is set to rival more traditional sources of natural gas due to big developments over the next six to 12 months.

To underscore this trend, CBM pioneer Sydney Gas Co initialled its second gas supply agreement with Australian Gas Light Company. Gas will be supplied from its demonstration plant at Camden on Sydney's southwestern outskirts.

Overseas, BP boss Lord Browne opened a can of worms in corporate governance after ordering directors to by-pass middle management and go straight to junior managers to get an accurate measure of the company's situation.

The move was made after BP was forced to slash its forecast for oil and gas production three times in less than two months. As you would expect, the City of London was not pleased and marked BP's stock down to its lowest levels in years.

Also not pleased were the Spaniards, who were in uproar over reports of a new oil slick from the sunken tanker 'Prestige'.

Some of that notorious Latin temperament was in evidence in Venezeula this week, where President Hugo Chavez is under pressure to call early elections. This is despite his plans to make the country a major gas exporter in five years. Whether Chavez will be around to see his dream come true is another matter.

In hapless Argentina, its suffering citizens are set more hardship after the President announced IMF-backed increases in gas and electricity prices.

Finally, some good news, a Carribean Island more famous for cricket and sun-seeking tourists is set to become a major oil and gas province. Thanks to a number of energy-related projects coming on stream, tiny Trinidad & Tobago is on a cusp of an oil and gas boom, according to their government.