EXXONMOBIL’s strength as a long time energy supplier and its well-earned reputation for completing major projects on budget and schedule is a bonus to the PNG LNG project.
According to Esso Highlands managing director Peter Graham, the PNG LNG project is competing against a long list of LNG projects in Australia, Asia, Africa, the Caribbean and the Middle East, and many of their competitors do not face the same project execution challenges and some have the advantage of greater project scale.
“However, in this business, timing is of utmost importance and PNG has the opportunity to deliver the right project at the right time,” he said.
Mr Graham was speaking at the 2009 PNG Chamber of Mines and Petroleum seminar at the Crowne Plaza hotel in Port Moresby yesterday, where he had the opportunity to provide to industry players and other stakeholders an insight into the work that is currently being undertaken by ExxonMobil.
“The growth in the global gas market is primarily driven by the growing demand for gas in power generation.
“We will contract to deliver LNG to electricity generators, who in turn contract to deliver electricity to customers.
“As the first in the chain of capital investments, if we fail to meet our timetable, the effects cascade down the line,” Mr Graham said.
And to ensure that the project is set for the final investment decision on Dec 8, ExxonMobil has completed preliminary engineering, evaluating bids for major scope of works and got their environmental impact statement approved by the Department of Environment and Conservation.
The company has also already submitted its licence application for processing to the Department of Petroleum and Energy, commenced early works, secured land for the LNG plant and marine facilities, seen progress on the Benefits Sharing Agreement and progressed negotiations with gas marketers in Asia, according to Mr Graham.
“For the ECAs, negotiations and lender due diligence kicked off with a group of lead ECAs in December last year.
“Negotiations of a term sheet for the ECAs and banks was concluded in June and definite documents are expected to be finalised this month,” Mr Graham said.
“For the commercial banks, a request for proposals for lead arrangers was sent to over 40 banks in July.
“Bids are due in mid-October and based on surroundings by the projects financial adviser, significant bank interest is expected,” he said.
“For both the ECAs and banks, written commitments are expected before a final investment decision.”
For the potential of bonds, according to Mr Graham, ratings negotiations with the three agencies (S&P, Moody’s and Fitch) kicked off in April.
Encouragingly, preliminary ratings indications were received in August and work continues in the effort to obtain two investment grade ratings.
If achieved, bonds would be offered to global investors in the first quarter of next year, Mr Graham said.
He added that loan signing with the ECAs, banks and ExxonMobil facility lender was expected in December with clearing of final CPs and loan draws by next February.