Govt committed to gas pipeline project: Avei

By BAEAU TAITHE Minister for Petroleum and Energy Sir Moi Avei will be meeting soon with senior ExxonMobil executives in the United States to discuss a revised programme for the A$5.3 billion (K12.5 billion) PNG to Australia gas pipeline project. Sir Moi told a press conference yesterday that the revised gas sales and pipeline development programme for the gas project is expected to be finalised over the coming weeks.He said the gas project had the full support of the Government and any project costs and magnitude of the PNG gas project presents major challenges, which could be managed with the support of its commercial partners.Sir Moi revealed the latest developments to the pipeline project, when he rejected a Post-Courier newspaper front page report that the Government had aborted the pipeline plan.“Let me assure the people of PNG and international investors that the PNG gas project has the full support of the Government,” Sir Moi said.He said the project, which will export gas from the Southern Highlands province to markets in Australia, remained the backbone of the Government’s overall gas commercialisation strategy.The main driver behind the project – Oil Search Ltd – also confirmed that the gas pipeline project is not in jeopardy.The company said the PNG Government had the option of taking up a 22.5% stake in the pipeline, which would provide crucial revenue for developing nation. The share price for Oil Search fell by 2 cents to A$3.34 last Friday. Australian analysts and brokers say the Oil Search share price was not affected because investors did not give any credibility to the Post Courier report that the Government had abandoned the project. The Government is developing two concurrent policies for gas commercialisation that would be adjuncts to the gas project. The first is on the Konebada Petroleum Park, which would accommodate a gas-based petrochemical industry and the second is a liquefied natural gas (LNG) facility on the Gulf of Papua.“In order to maximise value and opportunities for PNG, the gas commercialisation strategy must be underpinned by a foundation project, and at this point, the PNG gas project,” Sir Moi said.He said the Government had worked “relentlessly” to ensure the success of the project. In 2005, the Government set aside K400 million from the budget to help fund the State’s equity in the project and an additional K61 million was allocated in the recent supplementary budget to assist the business development plans of gas project landowners and to meet other project-related commitments.The Government expects the current and potential private sector stakeholders in the PNG gas project to respect the gas commercialisation strategy and to abide by the terms and conditions of their respective petroleum licenses.Sir Moi warned that the Government will not allow the project to be jeopardised by the commercial brinkmanship of licencees, who maybe pursuing an agenda that is contrary to PNG’s national interest and contrary to the interests of the other licences in the gas project fields.He said the viability of the project had been subject to increasing pressure due to escalating construction costs on the Australian section of the pipeline, which was also a factor behind the recent withdrawal of the APC consortium as the developer of the Australian pipeline.He said despite these challenges, the project’s aligned private parties had been working closely together to identify measures to offset the cost increases.Options that had been rigorously appraised include re-routing the Australian pipeline to more attractive market locations, such as Mt Isa in western Queensland, economising on the design and structure of the Australian pipeline delivery systems, replacing APC as the Australian pipeliners and renegotiating gas prices and volumes at selected locations.