Papua New Guinea: Pipeline push to reach Brisbane. "Enough demand for gas"
The National, Tuesday December 1
SYDNEY: Oil Search Ltd managing director Peter Botten yesterday indicated that the sponsors of the A$3.5 billion (K4.9 billion) gas pipeline from Papua New Guinea to north Queensland were seeking to extend the project as far as Brisbane.
Mr Botten said discussions were already underway with potential customers in Brisbane. "... we have been working diligently with a number of our corporate friends, and governments to secure other customers to provide pivotal markets to underwrite this project," Mr Botten told the fourth mining and petroleum investment conference here.
"We are at an advanced state in this process and the delivery of material volumes of gas into other markets, including Brisbane, is now a real reality." The inclusion of Brisbane would free-up the project from the reliance on aluminium concern Comalco Ltd which is a key potential customer.
Comalco is currently in the process of determining whether to go ahead with its A$1.4 billion alumina refinery at Gladstone in north Queensland or to situate it in Malaysia. A Queensland-based refinery would provide the pipeline with substantial base demand for gas, believed to be just under 30 petajoules a year.
"Non-Comalco options are within grasp and although I sincerely hope they will be part of the project, the time that they now have to take advantage of foundation customer status is now very short," Mr Botten said.
"The project sponsors are actively seeking to finalise remaining contract terms with our customers, there are really no real places to hide anymore, and the time has come to commit." As it currently stands, the pipeline project would bring natural gas from the Highlands to industrial markets in Townsville and Gladstone.
Mr Botten said there was confirmation that there was enough demand for gas to potentially underwrite the project financially.
He said Oil Search has secured commitments from five customers that represent market demand of between 130 and 140 petajoules of gas per year. "Substantially more than the 110 petajoules required for initial project commitment," Mr Botten said.
Project sponsors were also discussing potential contracts with a further three parties, he said. "The challenge now is to turn these conditional agreements into bankable contracts," he said.
The existing upstream participants in the project are Chevron Niugini, Mitsubishi Oil Co, Mobil Exploration & Producing Australia, Oil Search, Orogen Minerals and Petroleum Resources Kutubu. - AAP
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