The Papua Nya Guinea-Queensland gas project took a major step forward yesterday
Post-Courier (Port Moresby), Thursday 21/05/98
By RUTH WARAM and AAP
Pipeline to be built by Austr/Malay team
The PNG-to-Queensland gas project took a major step forward yesterday with the selection of the preferred contractor to build, own and operate the Australian section of the 2500 kilometre gas pipeline. Chevron announced it had selected a consortium of Australian Gas Light Company (AGL) and Petronas as the preferred tenderer, after a detailed selection process.
The gas pipeline is a major engineering undertaking, bigger than anything seen before in PNG and will take gas produced in the Southern Highlands and pipe it to a coastal processing facility near Kikori on the Gulf of Papua. Petroleum liquids and Liquefied Petroleum Gas (bottled gas) will be stripped out for use in PNG and for export. The remaining dry gas will be exported by pipeline across Torres Strait for sale to industrial customers in Australia.
The selection of the AGL/Petronas consortium has been welcomed by the PNG Government as a significant move forward by the project. Petroleum Minister Masket Iangalio said yesterday: ''I am very pleased to see the project is moving closer to fruition. ''The Government of Papua New Guinea is committed to ensure that there is a timely development of our gas reserves which will best benefit our people.
''The PNG gas project will not only provide a new energy source for PNG through LPG production but will also create a new export industry through the sale of dry gas to Australia.'' Dr Moramoro said the project was close to finalising conditional sales agreements with customers in Townsville and Gladstone.
''The selection of the pipeline contractor was a very competitive process, which saw several major international consortia bidding for the work. ''This project is receiving serious consideration from the international gas industry, because its economics and its timing are both very positive, another sign that it will be good for Papua New Guinea,'' Dr Moramoro said. The people of PNG are well represented in the gas project, through MRDC and Orogen Minerals. Other participants include BHP Petroleum (Australia) Pty Ltd, Chevron Asiatic Limited, Mitsubishi Oil Company Limited, Mobil Exploration and Producing Australia Pty Ltd and Oil Search Limited.
Shares in the New South Wales-based energy concern jumped as much as 35 cents, or three per cent, on the news its consortium had won the $1.5 billion project. But the stock finished the day down 2.5 at $11.68. Once the pipeline received final approval, the project could add about $1.50 to AGL's shareprice, according to one analyst. But Chevron's ambitious plan to build 2625 kilometres of pipeline at a total cost of $3 billion is still a long way from fruition.
Project director John Powell told reporters in Brisbane the project was still about six to eight months away from approval with sales contracts in Gladstone and Townsville yet to be completed. Other hurdles are a gas deal with the PNG government, laws to be passed in PNG and Chevron's internal approvals. Construction of the pipeline is expected to start next January, with completion set for 2001, when first gas flows are forecast.
Petronas said from Kuala Lumpur yesterday it would take responsibility for the offshore pipeline and AGL would look after the onshore pipeline. Petronas said the partners would also assume Chevron's current role as developer for the project. Petronas and AGL have been invited to negotiate terms for the construction and operation of the PNG offshore portion of the pipeline, measuring 160 km, it said.
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