Reserves guaranteed for Papua New Guinea Gas Project
Australian Financial Review, Thursday April 29
By Gary West
A powerful group of government and business leaders
earlier this month set the clock ticking toward an
unofficial deadline for a project that could transform
Queensland.
The Queensland Government and several international
and Australian energy groups announced that the $5.5
billion Papua New Guinea Gas Project had cleared a
major stumbling block.
An agreement had been reached to ensure the viability of
the project to supply gas from PNG's rugged highlands to
Queensland via a 2,655 kilometre pipeline.
The deal between Exxon Corp, operator of the Hides
gas field, and Oil Search, which has stakes in Hides and
the nearby Kutubu field, ensured sufficient reserves were
available to underwrite long-term contracts and paved
the way for talks with potential foundation customers to
resume.
Under the agreement, Oil Search, which owns about 27
per cent of both fields, will represent Hides operator
Exxon Corp's 47.5 per cent share of Hides in marketing
negotiations.
With the reserves in place, some of the speakers at a
well-attended function at Brisbane's Parliament House
turned up the pressure on possible customers such as
Comalco Ltd to sign gas sales contracts.
Comalco is considering Gladstone in central Queensland
as the site of a $1.4 billion alumina refinery if it can find a
competitive supply of energy but has not ruled out an
alternative location in Malaysia.
The Deputy Premier, Mr Jim Elder, said time was running
out for Comalco to make a decision on the alumina
refinery, since it had explored the concept for more than
20 years.
"There's no longer any rocks for customers to hide
behind," Chevron's projector director, Dr John Powell,
said.
Chevron and the Australian Gas Light Company Ltd,
which will jointly build the Australian segment of the
pipeline and lead the marketing push, turned up the heat
further by saying they hoped to finalise sales contracts
over the next two to three months.
It has been estimated that the pipeline and associated
projects will deliver about 5,100 construction jobs and
2,100 operational jobs, with capital investment reaching
$8.1 billion by 2010.
Proponents of the project hope the delivery of gas to
Queensland will spur the development of new mining and
industrial projects in the State. The Premier, Mr Peter
Beattie, said: "This is the most exciting development for
Queensland in a generation."
But it is not the only infrastructure development with
ramifications for north Queensland.
Ports Corporation of Queensland is moving toward the
$25 million fourth stage of the development of its
Dalrymple Bay Coal Terminal near Mackay, which is
scheduled for completion in October.
On a much grander and visionary scale, the Australian
Transport and Energy Corridor Ltd has proposed the
construction of a $10 billion high-speed freight railway
between Melbourne and Darwin, passing through Mt Isa,
which would be opened in 2005. But this project is still in
its early stages.
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