LNG Project Expected To Underpin PNG's Economy for Decades
by The National website, Port Moresby BBC Monitoring Asia Pacific
May 27, 2008
Papua New Guinea's national government on May 22 signed a US$10 billion (38 billion kina) LNG gas project agreement with a consortium that includes one of the world's largest companies, ExxonMobil, placing PNG on the global commercial scene.
The project will underpin the PNG economy for the next 40 to 50
years, as it has the potential to earn more than 130 billion kina in
income for the government and landowners over a 30-year period once
LNG export begins.
The gas agreement was signed by the governor-general, Sir Paulias
Matane, and Petroleum and Energy Minister William Duma and the
project's joint venture participants which include ExxonMobil, Oil
Search, Santos, Nippon Oil, MRDC and Eda Oil.
The agreement outlines the fiscal and legal framework by which
the LNG project will be regulated through its lifetime.
The agreement was formally presented to the prime minister, Sir
Michael Somare, at a ceremony in parliament May 22 where
executives of the joint ventures, members of the diplomatic corps,
members of parliament and invited guests attended.
The prime minister said the agreement is a major achievement and
provides a clear indication of the government's commitment to the
Sir Michael said its potential impact is significant as it could
double the GDP of PNG and provide a big boost to the average income
of the PNG workforce.
"Papua New Guineans should be proud. We have now become the 16th
nation in the world to have a substantial LNG project in place," Sir
He said the PNG LNG project is world-class and will show the
global community that PNG is an ideal place to invest and do
ExxonMobil project executive Peter Graham said the gas agreement
has set out the fiscal regime and legal framework by which the PNG
LNG project will be regulated.
Graham said ExxonMobil, which has a 41.5-percent interest in
the project, is pleased to have the gas agreement executed.
"We look forward to working with the PNG government and our joint
venture participants to maximum the value of the resource and long-
term sustainable benefits to the community," Graham said.
The project is set to enter front end engineering and design
(FEED) stage. The FEED team will comprise personnel from ExxonMobil,
the joint ventures and the FEED contractors based in PNG, Australia,
the United States and Japan.
The FEED stage will pursue LNG sales agreements, secure necessary
permits and licences, and undertake the financial planning necessary
for investment decision.
Oil Search managing director Peter Botten said they were happy
that the agreement has been executed. Oil Search has a 34-percent
stake in the project.
The PNG LNG project includes all development components including
the processing facilities, pipelines and LNG plant facilities.
Other stakeholders are Santos 17.7 percent, AGL 3.6 percent,
Nippon 1.8 percent, landowners 1.2 percent and Eda Oil 0.2 percent. Interests will change when the PNG state's nominee join as an
equity participant at a later date.
[Peter Graham described the project as "the single biggest [LNG]
project in the world" and said the project agreement was reached in
a record time of 11 months, the Papua New Guinea Post-Courier web
(C) 2008 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