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Gold/Mining/Energy : Lundin Oil (LOILY, LOILB Sweden) -- Ignore unavailable to you. Want to Upgrade?

To: Tomas who wrote (1557)	3/24/2000 7:36:00 AM
From: Tomas	Read Replies (1) \| Respond to of 2742

Papua New Guinea: Exxon in talks to be full gas project partner The National, March 24 DISCUSSIONS now underway with global oil and gas giant Exxon would see it formally become a full partner in the US$3.5 billion (K10.6 billion) PNG to Queensland gas pipeline project, oil industry sources said yesterday. It is understood the worldwide merger of Exxon and Mobil Oil would result in their local operations gaining a 25 to 30 per cent stake in the PNG Gas Project, providing the consortium with a vastly improved financial muscle. A spokesman for the PNG Gas Project said yesterday that once Exxon was brought into the project - besides its current 50 per cent stake in Hides it now has direct equity in Kutubu - the consortium would be able to finalise gas contracts with potential customers in Queensland. However, policy issues now before the Queensland and PNG governments would need to be resolved before the green light is provided for development. On the PNG front, the Government still needs to spell out the details of the fiscal regime that will apply to the project since the National Gas Act leaves a very wide scope for interpretation, suggesting that a tax rate of 30 per cent would apply for natural gas. It is not clear how liquefied petroleum gas (LPG) and condensate will be treated for tax purposes even though this will affect the overall economics of the venture. The other issue that the PNG Government needs to resolve is the level of the Government's proposed equity stake in the PNG section of the pipeline and in the wet gas condensate system. Expectations of significant fundraising by the PNG Central Government and/or Provincial Governments, sources believe, is highly unrealistic since the World Bank will not support external debt funding by the Government. All 20 provinces belong to the National Gas Corporation. Unless these agreements are in place in the next couple of months, the proposed June 2003 timing for the project could be jeopardised. In that case the venture could, as a result, be delayed by six months or more. The current phase of planning and development is costing the consortium about US$50 million over some three years. The next phase, involving front-end engineering and some other activities, will require about the same level of expenditure. The Manager, External Affairs, for the PNG Gas Project, Cliff Leggoe, said that once all approvals are in place, front-end engineering activities, as well as fundraising, would require about 10 to 12 months of work to be followed by a 30-month construction period. "The project is looking very robust with full commitment from all parties involved," Mr Leggoe said, noting that despite negative comments made recently by aluminium producer Comalco Ltd, the two parties have been working closely together since the beginning. wr.com.au