Wesfarmers could close Kwinana LPG plant

Rural conglomerate Wesfarmers could be forced to close its $125 million Kwinana LPG extraction plant when a 20-year LPG delivery contract with the North West Shelf partners expires in 2005.

Wesfarmers managing director Michael Chaney said this week that the Kwinana LPG extraction plant would be turned into an import terminal if the North-West Shelf partners decided to retain the LPG volumes now piped to Perth.

"A fair bit depends on whether the North-West Shelf venturers build train five," Mr Chaney said. "If they do, they're more likely to take LPG out of the Pilbara stream."

A spokesman from Woodside, which is the operator of the North West Shelf, has confirmed that redirecting the LPG now piped to Perth to export sales from NWS partner's own 800,000 tonne a year LPG plant was one option being considered.

One company that will keep a close eye on proceedings is gas distributor AlintaGas, which stands to lose a lucrative source of income as it shares in profit from the LPG plant under a long-standing agreement with Wesfarmers.

In the six months to June 30, 2001, the agreement accounted for more than 50% of AlintaGas's earnings before interest, tax and depreciation, as the LPG spot price spiked to more than $US320 a tonne.