Key PNG-Australia pipeline talks slip past target
MELBOURNE, Aug 31 (Reuters) - Resolution of key issues to advance the US$3.5 billion Papua New Guinea to Queensland gas pipeline had slipped past an August 31 target, project proponent Chevron Corp (NYSE:CHV - news) said on Thursday.
But spokesman Cliff Leggoe said the project was still on track to let US$65 million Front End Engineering and Design (FEED) contracts next month.
``It won't be happening on the first, but I am still hopeful we will be there sometime in September,'' he told Reuters.
The FEED contracts are seen as a key step toward making the ambitious pipeline project a reality, but gas supply contracts, fiscal arrangements and the Papua New Guinea government stake in the infrastructure must be finalised first.
Oil Search Ltd (Australia:OSH.AX - news)investor relations manager Garry Marsden said the issues were close to resolution.
``Obviously we are not going to get that timeframe, but it was always a fairly aggressive date anyway,'' he said.
Oil Search has about a 27 percent stake in the upstream reserves for the pipeline following a joint development agreement between the Kutubu, Hides and Gobe field stakeholders in April.
Marsden said U.S. oil giant Exxon Mobil Corp (NYSE:XOM - news) had stepped up its role after in April commiting gas from the PNG Hides field to the pipeline, giving it about a 30 percent upstream stake.
``They are one of the largest companies in the world. They do tend to throw their weight around a bit but it's being done in a very positive way, such that things are really starting to happen,'' he said.
Chevron said in June that completion of the FEED stage and the two-and-a-half year construction period would take the delivery of first gas to about the second half of 2004.
The upstream interests are still being finalised, but other stakeholders are Orogen Minerals Ltd (Australia:OML.AX - news), Santos Ltd (Australia:STO.AX - news), a Mitsubishi Corp unit and PNG landowners.
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