Papua New Guinea Sees Gas Project Settled by August (Update2)
By Stephen Wisenthal
Darwin, Australia, June 26 (Bloomberg) -- Papua New Guinea said it expects to complete talks on taxes within two months with Oil Search Ltd., Chevron Corp. and other developers of a $3.5 billion project to pipe natural gas to Australia.
Papua New Guinea officials have spent six weeks negotiating with project developers, landowners and local government, on tax levels and central government plans for a 30 percent stake in $1 billion of infrastructure, including processing plants and pipelines on the New Guinea side of the border with Australia.
``I am optimistic that these issues can be settled by the end of August,'' said Joseph Gabut, Papua New Guinea's secretary for petroleum and energy.
Mineral-rich Papua New Guinea, a developing nation of 4.6 million people, could boost revenue by exploiting gas reserves that far outweigh local demand if it can pipe the fuel 3,000 kilometers south across the Torres Strait to power stations and other customers in Australia's Queensland state.
Oil Search and Chevron said earlier this year they reached an agreement that will make Exxon Mobil Corp. and Santos Ltd. full participants in the gas project, one of the largest energy developments currently being planned in Asia.
The PNG government and the pipeline backers need to agree tax levels and investment plans by the end of August to stay on schedule and begin a detailed engineering design of the pipeline by the end of September, Gabut said.
Australian Gas Light Co., Australia's largest natural gas distributor and utility, and Petroliam Nasional Berhad, or Petronas, the Malaysian state oil company, are developing the 2,500 kilometer Queensland leg of the proposed pipeline.
Shares in Oil Search, the largest holder of oil and gas reserves in PNG, fell 0.3 Australian cents, or 0.2 percent, to A$1.83. They've gained 14 percent this month.
Gabut is in Darwin attending the Sixth Southeast Asia, Australia Offshore Conference.
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