Future of PNG gas pipeline secure: AGL - Breaking News - Business - Breaking News

The future of the planned $US3 billion ($A3.91 billion) Papua New Guinea to Australia gas pipeline firmed on Tuesday with a new tariff framework welcomed by owners The Australian Gas Light Company Ltd (AGL) and Malaysia's Petronas.

The new regulatory and legislative framework for new pipelines in Australia was announced by the Ministerial Council of Energy, which said tariffs should be set by commercial forces rather than by regulations.

AGL said the new framework was a significant and positive development for the pipeline, which is a 50:50 joint venture between Petronas - Malaysia's national petroleum company and AGL.

"The announcement facilitates the setting of tariffs on the Australian component of the pipeline through commercial forces for the first 15 years of the pipeline's operations rather than by a regulatory process," AGL managing director Paul Anthony said.

"All buyers of PNG gas will benefit from the arrangements requiring the pipeline to provide open access and non-discriminatory pricing."

He said it underpinned the supply of competitively priced gas from the planned PNG Gas project, which AGL has a 10 per cent stake in.

Buyers of PNG gas will now be able to negotiate directly with the sellers of the gas, which along with AGL include Oil Search Ltd, ExxonMobil Group, Mineral Resources Development Company Ltd Group and the Merlin Petroleum Company.

Gas from the project will be transported by the 3,800 kilometre pipeline, including a 650 kilometre sub-sea pipe, from PNG to Queensland, with first gas expected in 2009.

A financial decision on the gas project and the pipeline is expected later this year after the completion of a front end engineering and design study.

© 2006 AAP