AGL Energy Ltd said it has agreed to join an ExxonMobil Inc led project to investigate the merits of building a liquefied natural gas (LNG) project in Papua New Guinea to commercialize the nation's large gas resources.

Other participants include Oil Search Ltd and Santos Ltd.

Last year, the PNG gas partners suspended a plan to construct a gas pipeline from PNG to markets in Australia.

Oil Search said at the time that it believed more value could be gained by commercializing the large PNG gas resources through the development of a world-scale LNG industry in PNG.

The study, costing about US$60 million, will investigate the merits of building an LNG project capable of producing 5 million-6.5 million tonnes a year of liquefied natural gas.

Oil Search is also involved in a study with British Gas on commercializing PNG gas.

Separately, Australian and Toronto stock exchange listed InterOil Corp has proposed a 9-million-tonne-a-year LNG project in PNG together with a 1-million-tonne-a-year natural gas liquids plant, with initial production targeted for 2012.

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Related Project
PNG LNG Project
Facility Type: LNG Owner: ExxonMobil; Oil Search Limited; Santos; Nippon Oil Exploration; AGL; MRDC); Eda Oil
Scope: New Construction Location: Port Moresby Papua New Guinea