US$3b push for ExxonMobil

Business, Main Stories


ONLY a day before the final investment decision (FID), the PNG liquefied natural gas (LNG) project received a kiss of approval from the US Export-Import Bank last weekend with a US$3 billion (K8 billion) loan to ExxonMobil for the project.
A further US$5 billion (K13 billion) is expected from three other government’s export-credit agencies.
Two weeks ago, the Australian government announced that its facility – Export Finance and Insurance Corp (EFIC) – would assist Australian companies in the US$15 billion (K40 billion) project.
The news of US government support quickly spread globally last Saturday (Friday US time) as the announcement was made by Eximbank vice-president Phil Cogan, and carried immediately by major financial online agencies like Bloomberg, Forbes and Financial Times.
ExxonMobil’s financing arrangement comes only days after it signed a sales and purchase agreement with Chinese energy company, Sinopec, for a 20-year supply of two million metric tonnes of LNG a year from its two-train processing plant that will be located outside Port Moresby.
The PNG LNG partners will decide tomorrow whether or not to go ahead with the project.
All indications are that, the companies will give the final approval tomorrow – a decision that is expected to greatly change the economic landscape of PNG.
If in the affirmative, this will be the single largest foreign investment in the country’s history that will earn over K50 billion in revenue for the Government, not to mention benefits to landowners and businesses.
Mr Cogan said the funding from the US and about US$5 billion (K13 billion) from the export-credit agencies of three other governments will allow a consortium of companies to build a pipeline and liquefaction plant.
The project is led by Esso Highlands Ltd (41.4%) and its partners Oil Search Ltd holds a 34%   stake, Santos Ltd of Australia 17.7% and Japan’s Nippon Oil Corp. 5.4%, and the rest by Petromin’s Eda Oil  and landowners. 
The US Export-Import Bank is a state-owned agency that provides loans or guarantees to help US companies or exporters secure sales in projects overseas, especially in areas where there commercial banks were unwilling to participate or where there is high commercial and political risk.
Mr Cogan said the Eximbank board gave a preliminary endorsement to the plan last month and final approval was granted last Thursday (Friday PNG time).
The details of the financing were set to be announced this week, he said. Houston-based KBR Inc is doing the project design.