PNG Gas project boost tipped - actual market significantly greater than expected
PostCourier, July 5
AGREEMENTS with potential customers of the PNG Gas project were ''very close'' to being finalised, Petroleum and Energy Minister Sir Rabbie Namaliu said yesterday. He was speaking on his return from talks with the project partners and the Queensland Government in Brisbane.
''Not only am I very confident the necessary customer agreements will
be concluded, I believe the actual market the project will service will
be even greater than we had originally expected,'' he said.
The Post-Courier understands that the project partners are expected to
announce the signing of one of their major customers soon.
Sir Rabbie said long-term agreements with customers in Queensland the
electricity authorities and industrial users would give the green light
for the K8 billion project to start.
''The market survey has confirmed the potential demand is significantly
greater than original expectations, and that will lead to even greater
revenue flows to the PNG Government, and greater benefits for
landowners and provincial governments, over the expected lifetime of
the project and beyond,'' the minister said.
Detailed engineering works for the project are set to start next month,
according to the project's external affairs manager Cliff Leggoe.
The announcement last Thursday is further assurance by the developers
for the project to start as planned.
Added assurance comes with the approval of the draft environmental plan
by the Government last week.
It is understood the Department of Petroleum and Energy gave approval
of the draft plan, with conditions and recommendations for further
study before a final plan is submitted for approval by the minister.
Mr Leggoe told journalists on a tour of the Southern Highlands oil
fields last Thursday that the $US60 million engineering work, which
will be undertaken by a joint venture between Kvaerner, Egis and
Bechtel, will start on August 1.
He said the work will start after customers are secured, possibly by
the middle of this month.
The main project schedules are for financial close in mid 2001 and
first production in early 2003.
Mr Leggoe said the developers and partners are confident these targets
will be achieved.
Resources and business writers from Australia and PNG were taken on a
guided tour of the oil and gas fields, and production facilities to
give them first hand information.
The tour included visits to the Hides Gas project, the Kutubu
production facility, and a fly-over of Moran and Gobe fields, which are
expected to supply gas for the project.
Agreement between Oil Search and Exxon in May to allow Hides gas to be
used for the project removed market concerns over long-term supply
issues. It also allowed the proponent to secure sales agreements with
customers. Hides 4, drilled last year, substantially increased the
Hides field reserves and extended the height of the proven vertical gas
column to 1238 metres from the previous 890m from Hides 1 and 2.
There are now adequate reserves in the field to underpin the project.
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