Oil Search Drops Proposed LNG Project with BG Group
by The National website, Port Moresby, Papua New Guinea BBC Monitoring Asia Pacific
October 24, 2007
Oil Search has abandoned its proposed LNG venture with Britain's
BG Gas Group because progress with the ExxonMobil-led LNG project
has limited access to PNG gas resources.
Managing director Peter Botten said yesterday the memorandum of
understanding with BG, which is valid until October 31, would not be
extended due to uncertainties over when gas resources could be
accessed for the joint venture plan.
"BG and Oil Search have developed a positive and constructive
working relationship over the past year and have agreed to continue
to explore further joint opportunities within the LNG and natural
gas sector in PNG," he said.
Botten said the MoU had been abandoned even though analysis
had confirmed that the BG-Oil Search joint venture "was viable and
had many attractions for the development of the PNG gas reserve."
Despite this setback, Oil Search continues to target discovery of
additional gas reserves.
Last week, Oil Search began drilling its 90 percent-owned
Korobosea-1 wildcat, 28km northwest of the Kimu gas field discovered
in 1999, which could contain up to 500 billion cubic feet of gas.
Botten said negotiations had recommenced with the PNG
government last month on fiscal terms for the ExxonMobil-led LNG
project, in which Oil Search will be a major participant.
Negotiations have also commenced between equity partners in
various gas fields on project unitiszation for the LNG venture.
"The activities remain on track to be completed by the end of
2007-early 2008, at which time a FEED (front end engineering and
design) decision will be made," he said.
(C) 2007 BBC Monitoring Asia Pacific. via ProQuest Information and Learning Company; All Rights Reserved
PNG LNG Project
ExxonMobil; Oil Search Limited; Santos; Nippon Oil Exploration; AGL; MRDC); Eda Oil
Port Moresby Papua New Guinea