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Gold/Mining/Energy : Lundin Oil (LOILY, LOILB Sweden)

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To: Tomas who wrote (1049)	4/30/1999 9:19:00 PM
From: Tomas	Read Replies (1) of 2742

PostCourier, April 30: THE partners in the proposed Papua New Guinea Gas project still have several outstanding issues which need to be resolved before a final commitment will be made on the project. Orogen Minerals managing director Charles Lepani made the comment yesterday when releasing his company's third-quarter results to the Australian Stock Exchange. Mr Lepani said while the breakthrough on April 14 the signing of the reserve integration agreement between Oil Search and Exxon was a major boost, outstanding issues need to be resolved. ''While this achievement provided a major boost to the project, a number of tasks remain to be completed before a formal commitment to development is made,'' Mr Lepani said. He said these include confirming the market, access approvals, a co-operative development agreement between the licensees in the Petroleum Development Licence (PDL) 1 and PDL 2, project infrastructure, front end engineering and securing project finance. Mr Lepani said the partners will be striving to conclude the binding sales agreements with customers by June. He said securing these agreements and formulating the commercial arrangements for the development of the project's infrastructure for the PNG side of the project are crucial. Mr Lepani said the two issues are regarded as major prerequisites for successfully undertaking the balance of the work that needs to be completed prior to financial commitment to the development of the PNG Gas project. According to Mr Lepani, the project partners will need to agree and execute binding sales agreements for about 120 petajoules of gas a year. He said negotiations with a number of key customers, including Comalco and several Queensland Government-owned corporations, are well advanced with preliminary agreements already signed. Mr Lepani said an agreement needs to be reached with the PNG Government and landowners on the specific terms of development of the project. He said compensation agreements with Australian landowners also need to be finalised and based on heads of agreements that have already been executed. Mr Lepani said the participants need to finalise the formal co-operative framework for developing and operating the gas fields. He said the final ownership structure and financial obligations will be determined following these negotiations. Orogen has a 19 per cent interest in the project. The PNG Gas project consortium will need to conclude final agreements with the AGL/Petronas consortium, which would govern the building, ownership and operation of the Australian section of the pipeline. Mr Lepani said arrangements will also need to be made for the development of the infrastructure located for the PNG section of the project and relevant contracts written. He said each of the participants in the project will also need to arrange financing of their respective financial obligations to the project. Mr Lepani said Orogen intends to fund its capital obligation using a combination of existing cash reserves and debt finance. postcourier.com.pg

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