Papua New Guinea: "The most important project in the country's history".
PostCourier, Tuesday June 8
Gas pipeline project key for Oil Search
THE PNG to Queensland gas pipeline project is the most important project in the country's history and must proceed, Oil Search chairman Trevor Kennedy told shareholders at the company's annual general meeting in Port Moresby.
In a statement which highlighted the future prosperity of Oil Search and its operations in PNG, Mr Kennedy said that the long-term future of country was dependent on this project.
''PNG needs an active oil and gas industry for the nation's economy to thrive. ''And key to the health of the industry is the development of the gas project to Queensland.
''Indeed, I believe we can argue without fear of successful contradiction that the immediate and long term future of the country is dependent on this country.
''If you want to change the state of the nation, to help ensure the delivery of basic services to people in the highlands, lowlands and islands, this project must proceed,'' Mr Kennedy emphasised to the shareholders.
He said: ''It is, by any test, the most important project in the country's history. ''Its economic output in PNG is huge.
''The project could lead to investment in PNG of between five and nine billion kina, with possible recurrent expenditure in the country of up to one billion kina per year during the life of the project.
''The value of outputs could reach in excess of K2.5 billion annually, with a massive positive impact on the balance of trade.''
Mr Kennedy told shareholders it is estimated that the number of permanent jobs created, post construction, could exceed 3000 a massive return to the country over a period of more than 30 years, long after the decline of known oil from PNG.
''This project must succeed,'' he said.
Mr Kennedy said Oil Search was now carrying a significant share of the risk expenditure of the project adding that the potential rewards are huge.
''This project is a company maker for Oil Search.
''It will underscore our value and revenues for over 30 years and will ensure an increased value of our exploration portfolio. ''In the first full year of operations we expect it to double our profits. ''It has a major impact on all facets of our business hence our commitment to it,'' he said.
The PNG to Queensland gas pipeline has the full support of the PNG Government and the Queensland and Australian Federal governments.
At the AGM, shareholders approved the sale of 56 million Oil Search shares (12 per cent of the voting stock in the company) to Australia's leading energy group, Woodside Petroleum for A$ 118 million.
Money raised by this placement will be used to pay down debt and to fund the company's on-going activities in development, the gas and exploration work, Mr Kennedy told shareholders.
''This investment by Woodside represents an endorsement by Australia's leading energy group of the company's direction and base, as well as providing confidence in the company's fundamental value,'' Mr Kennedy said.
In 1998, Oil Search sold 25 per cent of its interest in the Hides oil field to Santos for US55 million which was used to pay down debt.
Mr Kennedy said a further US$35 million is possible should the gas project proceed.
''The company now has adequate funds to see us through the development of the gas project past financial close and on-going exploration activity,'' Mr Kennedy told the shareholders.
PNG's law and order problems also came under the Oil Search microscope.
Mr Kennedy said: ''The security issue is probably the only cloud on an horizon which otherwise is favored by a strong balance sheet, healthy oil prices, a loyal, committed, energetic staff and a future that has never looked brighter''.
postcourier.com.pg
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Papua New Guinea: 'Critical time for gas project'
The National, Tuesday June 8
PORT MORESBY: The next month or two are "absolutely critical" for the multi-billion kina PNG to Queensland gas project for any firm indication of where the project is heading, Oil Search chairman Trevor Kennedy said last week.
Mr Kennedy was referring to the firming up of gas customers in Queensland for which negotiations are at the most intense and critical stage.
He said the project is set to further reaffirm the bilateral relationship that exists between PNG and Australia.
The project will employ 3,000 people continually in its life.
Mr Kennedy told Oil Search's pre-68th annual general meeting dinner on Thursday said that the company as the "largest player" in the project was "excited" and so was Queensland, Australian and PNG governments.
He also said it is "probably the number one project" Australian Prime Minister John Howard has been able to participate in and was equally supportive of it.
Mr Kennedy also said 1998 had been a "remarkable year" for Oil Search".
"We are the largest player (and) have an enormous influence on all that happens here," he said.
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