Oil Search signs agreement with Indian firm

Oil Search Limited (OSH) has signed a memorandum of understanding (“MOU”) with India’s Oswal Projects for the supply of 50 petajoules of gas per annum to a proposed world scale ammonia and urea plant to be located in the planned Konebada Petroleum Park near Port Moresby. The MOU also provides the commercial framework for the negotiation of a comprehensive gas sales agreement (“GSA”), Oil Search said today.

Subject to the successful completion by Oswal of a comprehensive feasibility study, the oil and gas explorer said it was targeting commencement of gas sales to the plant by 2010. Oswal Projects is affiliated with the Oswal Group of Companies and is the primary stakeholder in the recently commissioned Burrup fertiliser facility in Western Australia. Oil Search managing director Peter Botten said Oswal Projects had a proven ability to develop large-scale fertiliser projects. “The natural gas required by the ammonia/urea plant, together with the gas requirements of the proposed methanol/DME facility of Itochu and Mitsubishi Gas Chemical, provides the critical mass necessary for the development of a petrochemical hub to be located within the proposed Konebada Petroleum Park,” Mr Botten said in a press statement. “It also helps to underpin the economics of the proposed spur pipeline from the PNG Gas Project pipeline to the Port Moresby area,” he added. Oil Search said these two potential petrochemical plant developments were key components of the multi-pronged gas strategy that was being pursued by the company, to develop a domestic gas industry in PNG without compromising the ability to service the Australian market through the PNG Gas Project. Gas for the ammonia/urea plant could be sourced from a number of licences within Oil Search’s substantial portfolio in PNG and the company said establishing the optimal supply arrangements would be part of its accelerated exploration and appraisal programme for its gas resources. The MOU also provides a framework for making excess power and water available in the Port Moresby area, the company added. At 1424 AEST, shares in Oil Search were 11c higher at $4.24.
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