Papua New Guinea-Australia gas pipeline on ice

Australian Gas Light Co. and Malaysia's Petronas, partners in the proposed Papua New Guinea-Australia natural gas pipeline, have decided to scale back front-end engineering and design activities on the pipeline's Australian leg even though most of the budgeted FEED activities have been completed.
AGL managing director Paul Anthony cited a dearth of critical foundation customers and escalating costs as the reasons for the decision to table the project.
Anthony added that the pipeline project is unlikely to proceed without an alternative ownership structure for the pipeline. Earlier this year he had emphasized that by saying AGL may bring in international partners with more pipeline experience to reduce the company's 50% equity in the line.
AGL's separate agreement to buy gas from the project remains subject to the upstream Papua New Guinea gas project's reaching financial close.
Early this year AGL finalised acquisition of a 10% stake in the Papua New Guinea highland gas fields feeding the pipeline—a move that gave the company a stake in every aspect of the project, including wellhead, pipeline, and retail operations (OGJ Online, May 26, 2006).