UPDATE: PNG LNG Project To Proceed Pending Sales, Funding
December 07 2009 - 11:50PM
Dow Jones News
Exxon Mobil Corp. (XOM) and its partners Tuesday agreed to
proceed with construction of a US$15 billion liquefied natural gas
project in Papua New Guinea, but only if they finalize sales and
financing agreements.
The PNG LNG project partners said they expect to conclude deals
for the remaining 2.8 million metric tons of annual LNG output and
outstanding financing arrangements by "early 2010".
"Pending completion of these sales and financing arrangements,
significant project activity will commence in 2010," the head of
Exxon Mobil subsidiary Esso Highlands, Peter Graham, said in a
statement.
The partners had said previously that they expected to make a
final investment decision for the project on Tuesday.
The project, which will have the capacity to produce 6.6 million
tons of LNG a year, is the biggest resources development undertaken
in Papua New Guinea and has the potential to transform the
developing nation's economy by doubling its gross domestic
product.
It is one of over a dozen LNG terminals planned for construction
in Papua New Guinea and Australia designed to tap an expected surge
in demand for cleaner-burning fuels from fast-growing Asian
economies nearby.
PNG LNG has signed binding agreements for the sale of a combined
3.8 million tons per annum of LNG to China Petroleum & Chemical
Corp., known as Sinopec, and Tokyo Electric Power Co. (9501.TO), or
Tepco.
Preliminary agreements with Osaka Gas Co. (9532.TO) and Taiwan's
state-owned refiner CPC Corp. have yet to be finalized into binding
contracts.
Exxon Mobil said Tuesday that the Papua New Guinean government
has backed into the project as planned through the acquisition of a
16.6% stake. That means Exxon Mobil now has 33.2%, Oil Search Ltd.
(OSH.AU) 29.0%, Santos Ltd. (STO.AU) 13.5%, Nippon Oil 4.7%, PNG
landowners 2.8% and Petromin PNG Holdings Ltd. 0.2%.
-By Ross Kelly, Dow Jones Newswires; 61-2-8235-2957;
ross.kelly@dowjones.com
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