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PNG LNG nears final project decisions

Uchenna Izundu
International Editor

BARCELONA, Dec.18 -- The Papua New Guinea LNG (PNG LNG) partners will make a final investment decision by yearend 2009 about proceeding with the ambitious LNG project on the Gulf of Papua near Port Moresby. Five trains might eventually be possible.

A senior government official said the first cargo is expected to be exported in 2013-14.

Paul Tiensten, Papua New Guinea's minister for national planning and district development, said at the ninth annual CWC LNG summit in Barcelona that, at the end of November, the government secured its $1.618 billion (Aus.) share of finance from the Abu Dhabi government-owned International Petroleum Investment Corp. in the UAE (OGJ Online, Nov. 5, 2008).

This was the "last potential hurdle-financing of the government's 19.4% share in the project," said Tiensten. IPIC has agreed to issue exchangeable bonds over the government's 17.6% stake in Oil Search, one of the partners in the PNG LNG project.

ExxonMobil Corp. heads the consortium planning to build two initial liquefaction trains having a joint capacity of 6.3 million tonnes/year of LNG.

Tiensten said the consortium also is looking at proving up resources for a third train. Further exploration is being carried out at Hides field, one of those dedicated to the plant, to provide gas for Train 3. For possible fourth and fifth trains, gas would come from other fields in the country, Tiensten told OGJ.

"There is no date for expansion as we are focused on implementing the first stage of the project, which is crucial to transforming Papua New Guinea and its people." Other fields include InterOil's Elk and Antelope to Talisman's Pandora and to Oil Search's Barikewa, Kimu, and Uramu fields which are being considered for other liquefaction plants and petrochemical plants.

PNG LNG would double the country's gross domestic product once it becomes operational, Tiensten said. He said the government will receive $2-3 billion in taxes from PNG LNG and $1 billion from its direct equity stake.

However, it will not receive taxes until 2018 as the consortium must first recover its capital costs. "The equity funds will be held in a trust fund and managed by an independent organization."

The government is working on a master plan that would provide a framework for developing gas projects beyond that planned by the ExxonMobil group.

The LNG project consortium includes ExxonMobil subsidiary Esso Highlands Ltd. 41.5%, Oil Search 34%, Santos 17.7%, AGL 3.6%, Nippon Oil 1.8%, MRDC 1.2%, and Petromin PNG Holdings' Eda Oil 0.2%.

Contact Uchenna Izundu at

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