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PNG leader hosted by gas project developer Exxon Mobil

PORT MORESBY, Papua New Guinea (PNG Post-Courier, April 7, 2010) – Prime Minister Grand Chief Sir Michael Somare has told a gala dinner in New York the US$15 billion Papua New Guinea Liquefied Natural Gas (PNG LNG) project "is a history-making, nation-changing, life transforming project".

Speaking at a dinner organized by project operator ExxonMobil in New York’s Metropolitan Art Museum on Thursday to commemorate financial close for the Liquefied Natural Gas (LNG) project, Sir Michael said the hope and optimism the LNG project was creating "will transform the future landscape of Papua New Guinea (PNG) forever".

Sir Michael told 200 guests representing the co-venturers in the project, project financiers and LNG customers from Japan, China and Taiwan and PNG Government and PNG US-based diplomats the various steps that had been taken to attain financial close.

A new generation of young Cabinet ministers and Members of Parliament, he said, had been involved in moving the LNG project forward and in the PNG Government’s "task of securing economic independence and national prosperity".

"This reminded me of my younger days when I was at the helm of a sovereign Government, after having led a core group of Papua New Guineans in our quest to secure political independence from Australia in 1975," he said.

Sir Michael said the common resolve of all stakeholders in the LNG joint venture had produced "valuable fiscal security" for the project and made it possible for a mutual agreement "on optimal taxation arrangements" that represented a win-win situation for all parties, including the 60,000 landholders living within the project footprint area.

"Our ministerial economic committee and state bureaucrats outlined a broad tax structure that ensured that over the medium to long-term any major upside in oil and gas prices would be equitably shared by project participants and the PNG government," he said.

Sir Michael said ExxonMobil, had secured for PNG a remarkable project by concluding technical, marketing and financing agreements "in record time".

Six export credit agencies from the United States, Japan, China, Italy and Australia had provided most of the loan funds, along with 17 commercial banks. Sir Michael said ExxonMobil had provided a significant amount of co-financing and had gone "the extra mile" to ensure the development of the LNG project.

Sir Michael said that in view of the unique challenges the project would face during the construction phase, he was instructing his ministerial colleagues to also "go that extra mile in the coming four years to make this project come together as smoothly as possible.

"Any delay in the project schedule would result in cost blowouts that would hurt overall achievements and goals. Having negotiated such a large loan we will only be able to service this loan once LNG exports commence," the Prime Minister noted.

Sir Michael said the success of the 20-year Development Strategic Plan developed by the Department of National Planning would depend on revenues from this LNG project to underpin ambitious development targets.

The plan, which will be launched soon, aims to make PNG a middle-income country by 2030 by creating a four-fold increase in per capita incomes in that period.

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