PNG Prime Minister Meets ExxonMobil Over Pipeline
PORT MORESBY, June 20 (Dow Jones) - Papua New Guinea Prime Minister Sir Mekere Morauta said Tuesday he is encouraged by Exxon Mobil Corp.'s (XOM) commitment to the A$6.5 billion dollar PNG to Queensland gas project, with final government approval at hand.
Morauta, speaking after he met Exxon Mobil senior vice president Harry Longwell, said the partners are now negotiating with potential customers in the northern Australian state of Queensland.
Exxon Mobil, which is operator of the project and has a 30% stake, took over the lead role from Chevron Corp. (CHV) in April this year. Since then, the partners have undertaken a new marketing approach, negotiating directly with customers rather than through third parties.
Morauta said ExxonMobil assured him it is "negotiating with customers in Queensland with a view to having firm contracts in place as soon as possible, and then move onto front-end engineering and design".
"This project has the potential to transform our national economy by providing a long term underpinning revenue flow," he said.
"I expect to be able to detail the results of my discussions with ExxonMobil to (cabinet) when it meets to consider a paper on the project on Thursday. This will lead to the resolution of the final few issues that remain in relation to the project."
Government sources said the remaining issues are the financing plan for the government's stake, and the final structure of the PNG entities participation in the project.
Led by 26% investor Oil Search Ltd.(A.OSH), partners in the pipeline have recently expressed frustration at securing contracts, but believe the project will eventually proceed.
Orogen Minerals Ltd. (A.OGM), a 13% stakeholder, has also complained about the slow progress. Other stakeholders include Chevron Corp. (CHV), and Santos Ltd. (STOSY); MRDC, which represents PNG landowner interests; and Japan PNG Petroleum. Orogen is 51%-owned by the PNG government's Mineral Resources Development Co.
Gas for the 3,000 kilometer pipeline down Queensland's east coast will be sourced from the Hides, Moran and Kutubu gas fields in the PNG highlands, which are jointly-owned by Oil Search, Orogen, Santos, ExxonMobil and Chevron.
The project is now competing with gas projects in the Timor Sea to power industrial development on the Queensland coast. Along with recent violence near where the pipeline will be located within PNG, this has led to recent market speculation that the PNG pipeline might not proceed. |
