AGL Considers Selling Stake in PNG Project
by Asia Pulse Pte Ltd
February 29, 2008
Australia's largest power retailer, AGL Energy Ltd (ASX:AGK), says it is considering divesting its 10-percent stake in Oil Search Ltd's liquefied natural gas (LNG) project in Papua New Guinea
AGL managing director Michael Fraser said the project was
too much of a departure from what it was when AGL originally
became involved, a project to pipe gas from PNG to Australia.
Work was suspended on the pipeline project at the end of
January 2007 and efforts refocused on developing PNG LNG.
The other project participants are Oil Search (44.2 percent), project operator ExxonMobil (39.4 percent), MRDC (a PNG
company representing landowner interests, with three percent)
and Nippon Oil Exploration (3.4 percent).
Project participants are expected to make a decision on
front-end engineering at the end of March or early April, Mr
"That's a point in time that we will look at what our
divestment options are for that asset.
"Expect us to be out of there at some stage in the not too
"PNG is a non-core asset (for AGL)."
He said AGL began considering exiting PNG as soon as the
pipeline project fell over.
"It's worth a fair bit of money but is a small stake in the
Both divestment and acquisition is high on AGL's agenda this
AGL has said previously it would divest assets in Chile and
"One of the pipelines at Moranbah (in Queensland) will be up
for sale in the coming weeks and that should be done by June,"
Mr Fraser said.
"We're looking at the rest of the portfolio and reshaping it
so that we're focused on our core business."
Mr Fraser said AGL was interested in the New South Wales
Government's proposed privatization of power assets, both
retail and generation.
"But they really need to decide first of all that it is
"There's been some union backlash on that.
"We have to see what the shape of the assets are ... but
that's something that's obviously a step-out opportunity for us
beyond organic growth."
Mr Fraser said there were many opportunities to continue
adding to AGL's renewable energy portfolio as part of its
The company is looking at landfill-gas projects.
It is already involved in wind, hydro and solar power, and
trades carbon on the Chicago Carbon Exchange.
"We're looking at the full range of technologies because
when you look at the Rudd government's announcements and
targets that they are setting by 2020 for the renewable
industry, there is something like A$25 billion (US$23.7
billion) to A$30 billion (US$28.44 billion) worth of projects
that need to be built," Mr Fraser said.
"There's no one technology that will deliver all of that
"We've got A$2 billion (US$1.9 billion) invested in
renewable assets, which makes us the largest private owner and
operator of renewable assets in the country.
"That's part of repositioning the company for a better
future, consistent with where the country is heading."
AGL is constructing two wind farms in South Australia and
its 140 megawatt Bogong hydroelectric project in the Victorian
"That's the largest hydro project in Australia for the last
25 years or so," Mr Fraser said.
"You're going to see a big step up in the development of
wind farms right across the country."
Chief financial officer Stephen Mikkelsen said the company
had a modest amount of debt that needed to be financed in the
next 12 months.
"Between the sale of non-ore assets and ability to raise
further debt on the back of those sales, I see us in a very
good position to capture these opportunities in coming years,"
Shares in AGL closed 40 cents, or 3.45 percent, lower at A$11.20 (US$10.62).
(C) 2008 Asia Pulse Pte Ltd.
PNG LNG Project
ExxonMobil; Oil Search Limited; Santos; Nippon Oil Exploration; AGL; MRDC); Eda Oil
Port Moresby Papua New Guinea