CNOOC to fund Altona early works on multi-billion dollar coal-to-liquids project

Chinese energy giant China National Offshore Oil Corporation has committed "significant funding" to accelerate work on a multi-billion dollar joint venture project with Altona Energy in the state's north - first announced in 2009.

The financial commitment and accelerated work program has helped secure a State Government extension on its exploration licences until June 2015. The licences were due to expire in two days.

Drilling on site is expected to start at the end of this year - a delay from the previously stated timeline of early 2012.

Altona managing director Chris Schrape did not reveal the funding commitment but said the process of securing a drilling contractor would start later this month and more details of the work program revealed subsequently.

The state government is already privy to all the details but the information has not been made public yet.

"To put a definitive timeline on this large-scale project is a difficult thing to do," Mr Schrape said.

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He denied there have been delays, saying the program was extensive and involved several phases.

"We have to get through the initial work program, evaluate results and then move forward. We are taking this one step at a time.

"We are still in the early stages of a bankable feasibility study stage and the public figure of between $3 billion and $4 billion as capital cost is still the same."

The two year extension and full area coverage is the most that the government can grant under the maximum five-year term for mineral ELs.

The work program will establish the design parameters for the initial box cut and mine plan for the Wintinna deposit, which holds an estimated 7.8 billion tonne coal resource, underpin the environmental impact assessment, including groundwater management, and define the coal quality profile for coal conversion options.

The BFS has a $40 million budget being funded by CNOOC, which holds a 51 per cent interest in the project.

The project comprises an open-cut mine with a 15 million tonne a year capacity, a 10 million barrel a year coal-to-liquids plant and a 560MW co-generation power facility.

The project is estimated to have the ability to produce 10 million barrels of fuel per year - about 90 per cent of SA's projected diesel demand up to 2030.

Chinese-government owned CNOOC has a number of investments in the Australian energy market, include an interest in the Queensland Curtis Island LNG Project.

Its latest annual report states that it has access to 28,111 sq kms of exploration acreage in Australia.