Dallas-based TXU has moved to secure a ready supply of local gas in order to sustain revenue as it considers moves for a $2 billion float to raise capital.

TXU is the third largest energy retailer in Victoria and has recently moved into South Australia. The company has invested more than $4 billion in Australia since 1995, including the $840 million acquisition of Pulse Energy from AGL last year.

While admitting that the idea was in the early stages analysts have noted that TXU would face some stiff competition in the IPO market with companies such as Virgin Blue, financial services group IOOF and developer Multiplex all considering listing.

The company has also signed an agreement with the partners of VIC/P 44 area in the Otway Basin for a long-term gas contract for the sale of natural gas.

Under the conditional agreement with the VIC/P 44 joint venturers TXU has agreed to purchase up to a total of 293 petajoules (PJ) of gas with an option to purchase, or an obligation to process, an additional 200 PJ.

The resulting contract quantity equals 493 PJ of gas beginning in 2006 and extending through to 2017.

VIC/P 44 contains the Casino gas field and several undrilled exploration prospects, all delineated by an extensive, state-of-the-art, 3D seismic data grid.

This innovative contract caters for the monetisation of future discoveries in VIC/P 44 and is conditional on the results of the Casino-3 appraisal well, which is scheduled to begin drilling during October 2003.

"If the Casino-3 well is successful in adding to the known gas reserves in the field, the project may move quickly to a declaration of commercial viability," said AWE's managing director Bruce Phillips.

"The signing of the TXU contract is a major step towards the commercial development of the Casino gas field and its surrounding exploration prospects.

"It allows the VIC/P 44 joint venture to concentrate on the appraisal activity of the field and the scope for added discoveries within the permit area," said Phillips.

Participants in Vic P/44 and the Casino field are AWE (Peedamullah Petroleum) 25.0%, Santos (operator) 50.0%, Mitsui (Mittwell Energy Resources) 25.0%.

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