Oil Search Ltd. abandons plans for gas pipeline from PNG to Australia - International Herald Tribune

Oil Search Ltd. abandons plans for gas pipeline from PNG to Australia -

SYDNEY, Australia: A 2.5 billion Australian dollar (US$1.93 billion; €1.5 billion) plan to pipe natural gas more than 3,000 kilometers (1,865 miles) from Papua New Guinea's southern highlands to Australia has been abandoned, the company involved announced Thursday.
Oil Search Ltd., Papua New Guinea's largest oil and gas producer, said it had completed a review of the PNG Gas Project and decided to suspend work because other options for liquid natural gas found in the region had "demonstrably higher value and return potential."
"It is clear that the alternative development options, including LNG, petrochemicals and other in-country options, which were not present two years ago, are now demonstrably more attractive and cannot be ignored," Oil Search Ltd.'s managing director Peter Botten said in a statement.
Oil Search said that with the global price of liquid natural gas soaring and gas prices in Australia remaining low, the partners in the PNG Gas Project — Oil Search, U.S.-based Exxon Mobil Corp., Australia's AGL Energy Ltd., Japan's Nippon Oil Corp. and the Papua New Guinea government — decided the pipeline no longer made financial sense.
Talks had started with Exxon Mobil on potential joint ventures to develop the Hides, Angore, Kutubu and Juha gas fields in the South Pacific island nation's central highlands.
Oil Search had been seeking expressions of interest for its plans to build a pipeline from the fields to the Papua New Guinea coast, under the Torres Strait and then to Mount Isa in Australia's Queensland state.
But project has been floundering since the developers of the Australian section of the pipeline, AGL Energy and Malaysia's Petronas Gas Bhd., put work on hold as construction costs soared.
Botten said the submissions it received confirmed the company's belief that the project was still "an attractive investment option based on appropriate cost control and continued strong market support," and AGL said it still believes the project remains viable in the long term.