INDIA FIRMS SEEK CONTRACT FOR PNG NATURAL GAS

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Talks center on long-term supply

PORT MORESBY, Papua New Guinea (PNG Post-Courier, April 18, 2008) –Two Indian firms have approached Exxon Mobil to buy 2.5 million tonnes of liquefied natural gas from Papua New Guinea’s planned LNG project on a long-term basis.

India’s Economic Times on Monday reported state-owned Indian Oil Corp (IOC) jointly with Petronet LNG are in negotiations with Exxon Mobil, one of the leading companies in the development of LNG and petrochemical project outside Port Moresby.

IOC aims to have the deal finalised towards the end of this year.

The paper reported that IOC is said to be negotiating a price of US$6 (K17.17) per mmbtu (million British thermal unit) for Papua New Guinea’s LNG, while the international LNG price is hovering over US$10 (K28.61) per mmbtu.

However, India recently bought LNG from the spot market at US$19 (K54.36) per mmbtu.

"LNG would be imported to our proposed terminal at Ennore. IOC and Petronet are jointly pursuing to buy LNG from Exxon Mobil so that we do not approach the same seller separately, resulting in price rise," IOC’s director-planning and projects BM Bansal was quoted as saying.

IOC has 12.5% in Petronet LNG, which operates five million metric tonne per annum (mmtpa) of LNG terminal at Dahej, Gujarat.

The paper also reported that IOC may also be interested in buying 3.7% stake in the PNG venture once Australian power retailer Australian Gas Light Energy decides to exit the venture.

AGL plans to exit from the PNG LNG project once the Government signs an agreement with the project developers led by operator Exxon Mobil, leading to the front end engineering and design (FEED) stage of the project.

Presently, operator Exxon holds 41.1% in project, while Oil Search, 34.1%, followed by Santos (17.7%), AGL (3.6%), Nippon Oil (1.8%). The remaining 1.2% is held by landowners.

The equity arrangement is subject to change when the PNG State nominee joins the project as an equity partner.

With the current demand for energy within Asia increasing, LNG will meet about one-third of the region’s natural gas requirements by 2030.

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

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