Massive benefits from LNG plantInterOil:



Proposed project to generate at least K75 billion for PNG economy
THE chief executive-elect of InterOil’s proposed liquefied natural gas plant, Dr Jack Hamilton, said yesterday the project will generate between K75 billion and K110 billion in direct-country benefits to Papua New Guinea.Reacting to ongoing controversy regarding possible incentives for the InterOil subsidiary, Liquid Niugini Gas, Dr Hamilton said a study by Focus Economics showed this project would also result in between K40 billion and K60 billion going direct to Government.Industry sources had told The National that a 10-year tax holiday for LNG could reduce PNG Government taxes by more than US$5 billion (K15 billion) over a 20-year period.Dr Hamilton said a campaign of misinformation currently surrounded the InterOil venture and he argued it was imperative for the country to start exporting LNG from 2012, as planned by InterOil.“Papua New Guinea’s window of opportunity to sell LNG would not stay open indefinitely,” Dr Hamilton, who is regarded as one of Australia’s foremost LNG experts because of his previous role in Woodside Petroleum’s North West Shelf LNG, said.The company has completed pre-engineering studies and is moving to have a gas plant at Napa Napa near Port Moresby ready to ship a nominal nine million metric tones of LNG each year from 2012. The gas supply will come from InterOil’s Elk discovery and other potential fields identified in Gulf province.“Competition from the very large gas fields in Australia’s North West Shelf could be expected to seek the same Asian and North American markets as Papua New Guinea was targeting,” he said.“The very essence of this development is timing,” Dr Hamilton said. “I have spent many years at the heart of the NW Shelf gas exploration and production industry, and I know there are five or six very large gas projects underway in WA with start up dates from 2013 onwards.“Papua New Guinea will face stiff competition from these projects, but we have one advantage if we get our gas into production sooner.“Gas projects require a very big capital investment and a long life of customer sales.“I think we have all seen what happens to a gas project if the partners and the customers spend too much time talking about it, and arguing over prices.”“Papua New Guinea has spent a lot of time and money on a pipeline that went nowhere, and I urge the Government and industry to work together, not in competition, to get PNG gas into the Asian and North American markets while there are still customers with unfilled supply contracts.“Apparent deliberate leaking of misinformation from the project agreement negotiations is not sending signals of welcome for investors behind Liquid Niugini Gas, who are poised to make this large investment in PNG. “The objective of all aspects of Government should be to work with all proponents to develop LNG, not try and pick a winner.“Liquid Niugini Gas is ready to go, the market will not wait forever,” Dr Hamilton said.He said the benefits that would flow from InterOil’s LNG project would be “far bigger than revenue from oil or any other resource development yet seen in PNG, and they stem from just this one project”.“Gas from Hides and other Southern Highlands gas fields is not included in the supply plans for the Napa Napa project, leaving plenty of gas to underpin further gas projects, if other developers wish to go it alone,” he said.