K28 billion project signed
By BRIAN GOMEZ in Sydney
EXXONMOBIL announced last Friday the signing of a joint operating agreement with its partners in the K28 billion PNG LNG project.
Oil Search managing director Peter Botten said the deal paved the way for the start of critical front-end engineering and design work, which would commence after the signing of a gas agreement with the PNG Government.
He said this was a major step forward in commercialisation of a world scale LNG project and for development of the company’s large gas reserves.
“Given the project’s importance both to Oil Search and PNG, supporting the project operator ExxonMobil to deliver this project, is our highest priority,” Mr Botten said.
ExxonMobil said its subsidiary, Esso Highlands, would treat natural gas at a conditioning plant at the Hides field and pipe the gas to a location about 20km north west of Port Moresby, where a 6.3 million tonnes a year LNG facility will be built.
A study by independent consultants ACIL Tasman released by the gas consortium, said detailed analysis showed the LNG project would double the size of the PNG economy (see story on Page 26).
The ExxonMobil project will commercialise gas at Hides, Angore and Juha and associated gas reserves at the operating Kutubu, Agogo, Gobe and Moran oilfields in Southern Highlands and Western provinces.
Oil Search said the joint operating agreement had excluded oil field liquids from gas used for LNG production and it is understood this will involve export of around 19,200 barrels a day of condensate via the Kumul terminal.
ExxonMobil will meet 41.6% of FEED costs with 34.1% from Oil Search, 17.7% from Santos, 3.6% from AGL Energy, 1.8% from Nippon Oil and 1.2% from landowner interests.
The PNG Government is expected to take an equity stake of 18% to 21% in the venture, reducing Oil Search to between 28% and 31% with proportional cuts for other participants.
The ACIL Tasman study said the LNG project would increase PNG’s gross domestic product from K8.65 billion in 2006 to an average of K18.2 billion annually once the project is completed.
“Oil and gas exports would increase more than four-fold, with average product value from the LNG project of K11.4 billion, compared to PNG total oil and gas exports of K2.6 billion in 2006,” the report said.
The study forecast that taxes, levies and royalties collected by PNG stakeholders would average K2 billion a year over the first 10 years and rise to K3 billion a year for the remaining 20 years of operation.
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