PNG SCRAPS PLANS FOR $600 MILLION GAS PLANT

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PORT MORESBY, Papua New Guinea (Papua New Guinea Post-Courier, June 20) – In what could be a major blow to Papua New Guinea’s intention to process gas onshore for export, the Government had instead opted to sell wet gas to Australian customers without properly amending the Oil and Gas Act.

Deputy Prime Minister and Minister for Petroleum and Energy Sir Moi Avei told the annual South-East Asia Australia Offshore conference in Darwin, Australia, that the Government decided not to build the US$600 million (PGK1.9 billion) gas plant linked to the Papua New Guinea to Australia gas pipeline project. He said the decision was to accommodate an additional customer of the Papua New Guinea Gas Project.

"Because of a certain customer we have made concessions to allow limited wet gas (liquid rich gas) to Australia," Sir Moi told the MarketWatch publication.

Industry analyst said yesterday that the Oil and Gas Act was not fully amended to allow for wet gas to be exported to Australia and under the Act, any wet gas from the Southern Highlands Province of Papua New Guinea would have to be processed onshore.

"Certain sections of the Oil and Gas Act must be looked at before such a decision is made to export all gas to Australia," the industry sources said.

But they said the sale of wet gas to Australian customers would generate more revenue for the country.

Sir Moi told MarketWatch that talks with Australian oil and gas producer Santos to rejoin the gas pipeline project were going well.

Santos has been reluctant to rejoin the project as it has interests to buy wet gas and build a liquefied petroleum gas plant somewhere in Queensland.

Meanwhile, Papua New Guinea’s oil and gas icon Oil Search Limited has told the conference that it would not meet the first half timetable for approval of the Papua New Guinea Gas Project.

The company said the project partners would target the second half of this year to move the project to sanction.

[PIR editor’s note: Last month, PNG lawmakers were expediting the finalization process for this project, as there have been obstacles that need addressing by both parties.]

June 21, 2006

Papua New Guinea Post-Courier: www.postcourier.com.pg/

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