BHP PULLS OUT OF PAPUA NEW GUINEA GAS PROJECT

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PORT MORESBY, Papua New Guinea (October 7, 1998 - Post-Courier)---A partner in the K 4 billion (US$ 1.79 billion) Papua New Guinea to Queensland joint venture gas project has withdrawn.

BHP Petroleum had notified other joint venture partners of its withdrawal. The pull-out was effective at the end of last month.

But BHP officials and other project officials were quick to point out yesterday that this was no reflection on the viability of the project.

BHP PNG manager Vincent Bull confirmed last night that this decision was taken following a review of the Australian giant's investments worldwide.

Mr. Bull said that after a review and prioritization of their global portfolio, they decided to off load their stake in the gas project.

He said they would be focusing on a smaller geographical location, especially in Angola, the Gulf of Mexico and in Ireland.

Industry sources, however, told the Post-Courier that BHP's withdrawal also highlighted the uncertain future of the project following continued deferral of the gas legislation. "This is an indication of the uncertainty about the project because of the non-enactment of legislation by the Government," one senior official said.

"Without the legislation, we cannot do much; we can not even spend money on major studies relating to the project nor can we sign formal Gas Sales Agreements without knowing what the rules are."

The Post-Courier understands that the partners of the gas project are yet to meet to discuss options for the BHP Petroleum stake.

However, one official said it is "likely to be taken up by the other partners on a pro-rata basis."

The petroleum industry has expressed grave concern about the delay in the introduction of the gas legislation to Parliament and has made this known to the government.

Three pieces of the legislation were ready for tabling during the June Parliament session but were deferred to the September session.

While waiting for the September Parliament session, the Gulf and Southern Highlands provincial governments commissioned a private lawyer to prepare their proposed legislation.

This forced the government back to the drawing board to have a look at the other legislation.

The government is now expected to introduce the gas legislation during the budget session in November.

For additional reports from The Post-Courier, go to PACIFIC ISLANDS REPORT News/Information Links: Newspapers/The Post-Courier (Papua New Guinea).

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