Papua New Guinea asks for money to take stake in giant pipeline project

MELBOURNE�Papua New Guinea Prime Minister Mekere Morauta has asked Australia for up to $650 million (Aus.) to help the PNG government take a direct interest in the proposed 3,500 km gas pipeline from Papua New Guinea to Queensland.

Papua New Guinea has already raised $190 million (Aus.) from the European Investment Bank, but needs a further $650 million to fund the major wet gas component of the project. Any Australian contribution would come on top of the $300 million in budget aid that it contributes to PNG each year.

Under PNG resources legislation, the government is entitled to take up to 30% in the project. In past resource developments, the private commercial partners involved have carried the PNG government through the project. In the case of the $6.5 billion (Aus.) gas pipeline venture, the entry prices involved are so massive that the government will have to put up the cash for entry.

The PNG request has the support of the project participants Chevron Corp., ExxonMobil Corp., Santos Ltd., Oil Search Ltd., Mitsubishi Corp., and Orogen Minerals Ltd.

The PNG Government is expected to distribute parts of its equity to local landholder and provincial government agencies in the Southern Highlands and Papuan Gulf provinces through which the pipeline will pass.

Operatorship of the project may change once development gets under way. ExxonMobil, with a 30% stake, could take over from Chevron, which has 9%, once the government allows the pipeline and allied construction to proceed.

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