PNG gas project gets boost with $1.86b sales
PNG gas project gets boost with $1.86b sales
Associated Press, Sydney, Australia
Plans to build a A$2.5 billion (US$1.86 billion) pipeline to
carry natural gas from Papua New Guinea to Australia received a
major boost Tuesday when an Australian energy company signed a
conditional agreement to buy gas over 20 years.
Australian Gas Light Co. pledged to buy A$4.5 billion ($3.35
billion) worth of gas from the PNG Gas Project, part-owned by
ExxonMobil Corp., over two decades.
The agreement means that Exxon has signed up enough customers
to virtually guarantee that work on construction of a long-
awaited 3,000-kilometer (1,865-mile) pipe from Papua New Guinea's
Southern Highlands to Australia could get underway early next
year.
Last week, Aluminum refiner Alcan signed a 20-year agreement
to take gas from the project.
"While there are additional volumes available, our marketing
focus now is on converting these arrangements to binding sales
contracts capable of supporting a project sanction decision in
early 2006," said Exxon vice president of gas and power marketing
Rob Franklin.
AGL also entered into a conditional agreement with Oil Search
Ltd, one of the companies involved in PNG Gas to take a 10
percent stake in the project for $300 million.
AGL managing director Greg Martin said the ultimate decision
to start work on the pipeline still lay with the project
sponsors, but he was confident it was going ahead.
"This announcement today, with that made by Alcan last week,
will substantially progress this project forward," he said.
Exxon has a 39.4 percent stake in PNG Gas Project while
resource company Oil Search, which is listed on the Australian
and Papua New Guinea stock exchanges, has a 54.2 percent stake.
MRDC, a company representing Papua New Guinea landowners has 3
percent and Nippon Oil Exploration Limited owns a 3.4 percent
cut.
Analysts described the AGL deal as pivotal for PNG Gas, which
has been in gestation for more than a decade.
"The biggest hurdle has always been capturing markets," said
Morgan Stanley energy analyst Stuart Baker. "Now it looks like
they have enough gas volumes in broad terms, so it is hard to see
it not occurring."