BHP Billiton Limited, together with its joint venture partner Esso Australia Resources Pty Ltd, today announced that a non-binding Memorandum of Understanding (MOU) has been signed with TXU Electricity Ltd (TXU) for the sale of Gippsland gas. The MOU is subject to a number of conditions precedent.

The MOU covers the sale of 860 petajoules (P/j) of Gippsland gas to TXU for delivery mainly into Victoria via the Gasnet system in the period 2005 to 2017.

“This is a significant milestone for the joint venture involving the largest sale of Gippsland gas since long-term supply arrangements were entered into with the Victorian Government in the late 1960s,” said Terry White, Vice President Bass Strait, BHP Billiton Petroleum Pty Ltd.

Currently, the majority of gas entering the Victorian market is supplied under a long-term contract between BHP Billiton/Esso and the State Government owned Gascor. This contract is due to expire towards the end of the decade. The MOU with TXU includes gas for delivery into Victoria in the period following the expiry of the Gascor contract.

The MOU with TXU follows last month’s MOU with TXU covering the sale of up to 20 P/j of Gippsland gas per year for use in TXU’s Torrens Island power station in South Australia between 2004 and 2007.