BANKS and financial institutions have given the thumbs up for the PNG liquefied natural gas (LNG) project to get rolling.
The financing arrangement was concluded in New York last Friday, clearing the final hurdle for this massive project.
In financing terms, this is the biggest oil or gas project ExxonMobil has undertaken on its own.
ExxonMobil and its partners were successful in negotiating this huge financing at a time when the financial crisis has weakened the global economy, and this represents a big plus for PNG.
Prime Minister Sir Michael Somare congratulated project operator Esso Highlands Limited for successfully concluding the financial arrangements that enabled the US$15 billion (K40 billion) project to proceed.
The conclusion of the sale and purchase agreements with four Asian LNG customers recently and the completion of financing arrangements represent a major milestone in the Government’s ongoing efforts to build a vibrant economy, he said in a statement.
He said projections suggested that company tax proceeds from this project would average between K5 billion and K7 billion annually during the 30-year life of the project.
Sir Michael said ExxonMobil had advised the Government that the LNG project financing agreement represented the biggest loan funding ever provided for any oil or gas project worldwide.
“This is indeed a big honour for our nation. I call on all stakeholders to join hands in ensuring smooth progress during project construction to enable the LNG export operation to be commissioned by the end of 2013.”
Esso Highlands Ltd managing director Peter Graham and ExxonMobil Development Company president Neil Duffin said: “The project will be developed in compliance with the highest standards for health, safety, environmental and social safeguards and will support the PNG Government’s objective to strengthen its economy and infrastructure base for the benefit of its people.
“The comprehensive national content plan focuses on development of the local workforce, expansion of supplier capability, and strategic community investment.
“Funding for the PNG LNG project will come from the co-partners and through market-rate loans arranged with export credit agencies and commercial sources. The project team successfully negotiated this complex transaction for the project in a very difficult financial market.”
The concluded financing arrangements comes just 10 days after project partners led by operator Esso Highlands Ltd signed off the last final 20-year sale and purchase agreement (SPA) with China Petroleum Company (CPC) Taiwan for about 1.2 million tonnes per annum (mta) of LNG.