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Papua New Guinea LNG JV signs joint operating agreement

Rick Wilkinson
OGJ Correspondent

MELBOURNE, Mar. 18 -- Companies in the ExxonMobil Corp.-led Papua New Guinea LNG joint venture signed and executed a joint operating agreement (JOA) and released a study on the economic impact of the project on that country.

The JOA covers governance, upstream operations, pipeline arrangements, and gas liquefaction. ExxonMobil said the next step is to resolve the fiscal terms and related matters with the Papua New Guinea government, prior to the engineering and design stage. LNG will be jointly marketed with ExxonMobil acting as marketing representative.

The gas feedstock will be obtained from three fields—Hides, Angore, and Juha—along with associated gas that was reinjected into four producing oil fields—Kutubu, Agogo, Gobe, and Moran. All fields are in the country's southern highlands and western provinces.

Gas will be initially treated at a gas conditioning plant at Hides prior to moving via a pipeline to the JV's proposed 6.3 million tonne/year LNG plant to be built 20 km northwest of Port Moresby.

Interest holders are ExxonMobil with 41.6%; Oil Search, 34.1%; Santos, 17.7%; AGL Energy, 3.6%, Nippon Oil, 1.8%; and landowner interests, 1.2%. These percentages will change when the Papua New Guinea government joins the project at a later date. There may also be changes to the line-up because AGL Energy of Sydney has indicated it is considering its options for disposing of its share in Papua New Guinea assets.

The economic impact study indicates the project could double Papua New Guinea's gross domestic product and create more than 7,500 jobs during the initial construction phase, 20% of which would be for local workers.

About 850 jobs are likely to be maintained during production operations and the majority of those would be held by Papua New Guinea nationals.

The study also suggests Papua New Guinea oil and gas exports will increase by more than a factor of four. Average annual exports from the LNG plant could reach $4.16 billion compared to the total oil and gas exports of $950 million in 2006.

The study estimated the total direct cash flow to Papua New Guinea (government and landholders) from the project will be estimated $31.7 billion over 30 years.

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