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Post Courier
Wed, 17 Mar 2010
PORT MORESBY, PNG ---- Papua New Guinea’s bid to become a member of the exclusive liquefied natural gas exporters will soon become a reality as financing arrangements get finalised.
Prime Minister Sir Michael Somare was first to congratulate the project proponents for the announcement which was made on Friday.
Esso Highlands Limited, a subsidiary of Exxon Mobil Corporation and operator of the PNG LNG Project announced that sales and purchase agreements with LNG buyers and financing arrangements with lenders are now complete and that the project is proceeding with full execution. The integrated development includes gas production and processing facilities in the Southern Highlands and Western Provinces of PNG; liquefaction and storage facilities with capacity of 6.6 million tons per year, located northwest of Port Moresby on the Gulf of Papua; and over 700 kilometres (450 miles) of pipelines connecting the facilities.
The investment for the initial phase of the project, excluding shipping costs, is estimated at $US15 billion.
Over its 30-year life, PNG LNG is expected to produce over 9 trillion cubic feet of gas. First LNG deliveries are scheduled to begin in 2014, following a construction period of about four years.
Peter Graham, managing director of Esso Highlands said “The project will be developed in compliance with the highest standards for health, safety, environmental and social safeguards and will support the PNG government’s objective to strengthen its economy and infrastructure base for the benefit of its people.
The comprehensive national content plan focuses on development of the local workforce, expansion of supplier capability, and strategic community investment.” He added, “Funding for the PNG LNG project will come from the co-venturers and through market-rate loans arranged with export credit agencies and commercial sources. The project team successfully negotiated this complex transaction for the project in a very difficult financial market.”
In May 2009, the Independent State of Papua New Guinea, representatives of project area landowners, and four provincial and 10 local-level governments approved the PNG LNG umbrella benefits sharing agreement, confirming support from landowners and all levels of the PNG government.
The overarching agreement outlines the sharing of revenue streams from royalties, development taxes and equity dividends totalling about K15 to K20 billion ($US5.6-7.5 billion).
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