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By Yehiura Hriehwazi

PORT MORESBY, Papua New Guinea (The National, July 29) - Oil Search managing director Peter Botten said yesterday there are still a few "commercially sensitive issues" that have to resolved before an agreement is reached on the Front-End Engineering Design (FEED) phase of the proposed PNG-Queensland gas pipeline project.

Botten told The National from his Sydney office that among the issues currently under negotiations were confirmation of a firm customer base and financing arrangements to fund the FEED program, which was likely to cost about US$100 million (K400 million).

He could not say anymore than that because the matter was "commercially sensitive." However, he expressed satisfaction on the progress of discussions held so far with all the project participants who would vote by the end of the month on whether or not to proceed with FEED.

If they agree and sign on FEED, more potential customers would sign up because of a greater level of certainty that PNG would supply gas. The engineering and design process would take 12 to 18 months to complete.

He said a number of customers were lining up to buy PNG gas and would enter into serious negotiations once the partners agreed on FEED.

Botten’s comments followed an article published in the Australian Financial Review that said the long-planned $US3.5 billion gas pipeline project is set to go ahead following a meeting in Melbourne of key executives of the four project owners who agreed to seek fresh funding from their respective boards before the end of the month (see page 18).

The project owners are Oil Search Limited with a 54.2 percent stake, ExxonMobil Corp. (39 percent), Mineral Resources Development Corporation (3.3 percent) and Nippon Oil Exploration (3 percent).

Oil Search Limited and the PNG government have been having a series of discussions with ExxonMobil to fast track the project.

Last month, Petroleum Minister Sir Moi Avei and Petroleum Secretary Joseph Gabut flew to Texas, U.S., for discussions with ExxonMobil executives and urged them to move the project forward.

Botten accompanied them to Texas and it is understood Moi returned a very happy man.

Botten said their range of discussions with ExxonMobil had led to a strong alignment among the participants and they agreed on a way forward - a roadmap for decisions to go into FEED.

July 30, 2004

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