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

To: Greywolf who wrote (926)	2/24/1999 5:39:00 PM
From: Greywolf	Respond to of 2742

PNG frustrated as Chevron and Esso stall gas From upstream.tm THE GOVERNMENT of Papua New Guinea is growing impatient with Chevron and Esso over their inability to pool mutual gas reserves that are needed for the billion-dollar PNG Gas to Queensland project, writes James Tham. Senior officials from the Department of Petroleum and Energy are irked by the impasse in commercial negotiations to combine dry gas from Hides with associated gas from Kutubu. Esso holds a 47.5% stake in Hides, together with operator Oil Search (27.5%) and Santos (25%). The Kutubu tract is owned jointly by operator Chevron (19.375%), Oil Search (27.138%), Mobil (16.455%), Orogen Minerals (15.75%), BHP Petroleum (9.688%), Petroleum Resources Kutubu (6.75%), and a Mitsubishi Oil affiliate (4.844%). Oil Search and Santos are more aligned with Chevron than Esso, joint venture sources said. "Chevron and Esso just haven t got their acts together. This will move the milestones back by three to four months," a senior DPE official said. "I think the corporate egos of these companies are getting in the way." Last year, both companies blamed the lack of downstream legislation in PNG for delays in the country s largest ever infrastructure project, but now that a new law is in place, they are obliged to resolve the matter swiftly, the official said. If the impasse drags on, the PNG government will "have no choice" but to exercise its discretionary powers under the Oil and Gas Act and forcibly squeeze out an agreement, he warned. A Chevron spokesman said: "It certainly looks like there will be some slippage in the schedule Ñ 2001 is most unlikely, 2002 is looking far more likely." He said the duration of the delay depends largely on how soon the reserves issue with Esso is resolved. "It s a tough commercial negotiation. How do you find a commercial balance between Kutubu gas, which is close to existing facilities, high in LPG and condensate, and Hides, which is a lot further away and is dry gas?" Hides contains over 4 trillion cubic feet of gas in place but lies more than 200 kilometres from the country s coastline in the hilly Central Highlands. Gas reserves in the Kutubu permit alone are insufficient to supply a baseload of potential customers with 20 to 30-year contracts. The stand-off has prompted Chevron and its Kutubu partners to consider other alternatives, said the spokesman, who declined to elaborate.