Papua New Guinea signs landholder deal for LNG project

The government of Papua New Guinea has signed a benefits-sharing agreement with landowners concerning the ExxonMobil Corp.-led Papua New Guinea LNG (PNG LNG) project.

May 27th, 2009

Rick Wilkinson
OGJ Correspondent

MELBOURNE, May 27 -- The government of Papua New Guinea has signed a benefits-sharing agreement with landowners concerning the ExxonMobil Corp.-led Papua New Guinea LNG (PNG LNG) project.

The agreement is worth about 20 billion kina, or about $9.5 million (Aus.), over the life of the project and gives provincial governments and landholders a 7% stake in PNG LNG. The central government will retain 12.5% interest.

The government has also committed to a number of infrastructure projects, including the construction of a sealed major highway linking the Gulf of Papua to the country's north coast. It will also seal the Gulf-Southern Highlands highway and put 100 million kina towards building the first phase of a Hela city development.

Meanwhile, it was reported that China' Sinopec is negotiating to buy 2 million tonnes/year of LNG from the project.

The project comprises a two-train, 6.3 million tpy liquefaction plant near Port Moresby with gas sourced from various gas fields in the highlands including Hides and possibly Juha.

ExxonMobil has 41.6% and operatorship of the project, Oil Search 34.1%, Santos 17.7% and Nippon Oil 5.4%. Landholder interests hold the remaining 1.2%.

Papua New Guinea's state-owned Independent Public Business Corp. is using its 17.56% stake in Oil Search to raise $1.68 billion to fund the government's 19.4% share of the project which will then reduce the interests pro rata held by the other partners.

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