OCEANIA: The ExxonMobil, Papua New Guinea Partners Sign LNG Agreement

OCEANIA: The ExxonMobil,  Papua New Guinea Partners Sign LNG Agreement
ExxonMobil Corp., the world's biggest publicly traded oil company, and its partners in a proposed Papua New Guinea liquefied natural gas project signed an agreement that allows initial work on the venture.

The accord includes gas supply arrangements and sets out the partners' current interests in the project,
ExxonMobil said in a statement today. Further agreements are required with the Papua New Guinea government before the venture gets full approval.

The project includes Port Moresby-based Oil Search Ltd. and Santos Ltd. and proposes to commercialize the Hides, Angore and Juha gas fields and deposits in the Kutubu, Agogo, Gobe and Moran oil fields in the Southern Highlands and Western Provinces. Deliveries may begin in late 2013 or early 2014, Peter Botten, Oil Search's managing director, said Feb. 19.

Exxon holds 41.6 percent of the $10 billion venture, it said in today's statement. Oil Search, Papua New Guinea's biggest oil producer, has 34.1 percent, Santos 17.7 percent and AGL Energy 3.6 percent. Nippon Oil Corp. has 1.8 percent and local landowners 1.2 percent.

Oil Search rose as much as 3.7 percent to A$4.52 in Sydney trading. Santos gained 0.9 percent to A$13.14.

The agreement ``paves the way to progress into the front end engineering and design phase of the project'' subject to the completion of a gas accord with the Papua New Guinea government, Botten said in a statement to the Australian Stock Exchange today.

Double GDP
The gas will be treated at a gas conditioning plant at Hides and then transported by pipeline to a 6.3 million-metric-tons-a- year gas liquefaction and storage plant the partners propose building near the capital, Port Moresby.

An economic impact study commissioned by the partners predicts that the project may double Papua New Guinea's gross domestic product and provide 7,500 jobs during construction, with 850 maintained during production operations,
ExxonMobil said.

ExxonMobil is ``optimistic'' about the prospects to develop the LNG venture, Mark Nolan, chairman of Exxon's Australian unit, said March 7. There are still some ``commercial issues'' to agree on with the Papua New Guinea government before the partners can commit to investing more on engineering and design work for the project, he said.

Source: Bloomberg|by John Viljoen

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