PNG: "The pipeline project is now a virtual certainty" - Sydney Morning Herald, Friday Aug.13
Enron signs up for PNG gas; pipeline plan firms
By KATE ASKEW and ANTHONY HUGHES
The Queensland Government's Ergon Energy yesterday signed up for 50
petajoules of gas from the $US2.5 billion Papua New Guinea-to-Queensland
gas pipeline, in the process underpinning the project by providing the baseload
gas requirement.
It also firms up the planned extension of the pipeline to Brisbane markets,
beyond the originally planned finishing point of Gladstone, with both Energex
and Ergon Energy having signed up for a total of up to 170 petajoules of gas
over a 20-year period.
Yesterday's announcement now enables the project participants to move ahead
with their individual financing arrangements, at the same time completing a $95
million engineering and design phase.
Those processes are expected to be finalised within 14 months but the starting
date for first gas from PNG has been pushed back from 2002 to 2003. AGL
managing director Mr Len Bleasel said the project was aiming for financial
close in the third quarter of next year.
"That still allows us to complete the pipeline construction and have gas
delivered into Queensland in 2003," Mr Bleasel said.
AGL also indicated that it was hopeful of securing customers to justify
extending the pipeline from Gladstone to Brisbane.
"There is new load being identified in the Brisbane market sufficient in size for
us to be comfortable starting the planning process," Mr Bleasel said.
He would not identify these customers but said talks were under way with
three significant customers.
Nevertheless, the pipeline project is now a virtual certainty, with the financing
and ownership structure of the PNG section of the pipeline the most pressing
task for the owners.
Negotiations have begun with the PNG government-owned National Gas Corp
to take a major part in the local section of the pipeline and members of the
PNG Department of Petroleum and Energy have begun discussions with
various financing bodies.
Any increase in the involvement of the PNG Government reduces the financing
requirement for the gas owners, Chevron Niugini, Oil Search, Orogen Minerals
and Merlin Petroleum Co.
Yesterday, Orogen Minerals reported a 257 per cent rise in first-half net profit
to $48 million, boosted by a one-off gain from the depreciation of the PNG
kina, demonstrating the company's ability to deliver its portion of the funding
for the pipeline project.
The PNG-to-Queensland pipeline infrastructure has already been signed for
under a build-own-operate deal with a consortium involving the Australian Gas
Light Company and Malaysia's Petronas.
These partners will now be able to finalise their funding.
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