Apache declares force majeure on Australia gas deal

SYDNEY, Dec 29 (Reuters) US oil and gas producer Apache Corp. and its partners in the Harriet gas field off northwest Australia have declared force majeure on a gas reserves agreement with India's Burrup Fertilisers Pte. Ltd.

Apache, Australia's Tap Oil Ltd. and Kuwait Foreign Petroleum Exploration Co. (KUFPEC) have told Burrup they are suspending a requirement in the agreement to demonstrate reserves sufficient to meet a 20-year supply.

Perth-based Tap Oil said the force majeure was a result of well failures at the Harriet gas fields and that the venture partners would continue to seek further exploration and development programmes for gas in its permit areas.

The venture ''is currently supplying the daily contract quantity of gas in accordance with the terms of the agreement and it anticipates to be able to deliver gas for some years to come,'' Tap Oil said in a statement on Thursday.

The venture partners were also planning talks with Burrup on a coordinated resolution to the issue, Tap Oil said.

Under the agreement, the Harriet joint venture was contracted to supply more than 66 terajoules of gas a day to the Burrup fertiliser plant, owned by India's Oswal Group.

The A$630 million ($498 million) plant, which started production in April this year, has a production capacity of more than 760,000 tonnes of ammonia annually and is the largest new development of its kind, according to Burrup's Web site.

The Harriet venture, 69 percent-owned by Apache, produces oil, gas and condensates from fields located about 120 kilometers west of the Australian city of Dampier. KUFPEC owns 19 percent stake in the venture while Tap Oil holds the remaining 12 percent.

Shares in Apache settled at 0.48 percent higher at $66.73.

($1=1.27 Australian Dollar) Reuters SBA VP0505