$16b Papuan LNG project ready to go MATHEW MURPHY December 5, 2009 .
THE ExxonMobil $US15 billion ($16.2 billion) liquefied natural gas project in Papua New Guinea is expected to be approved on Tuesday, following the first binding sale of gas from the project.
ExxonMobil announced it had struck a sales and purchasing agreement with the Chinese company Sinopec, eight months after an in-principle deal was reached between the two.
Sinopec will take 2 million tonnes a year from the project to supply an LNG terminal it will build in Qingdao in Shandong province. China aims to treble its use of gas to about 10 per cent of energy consumption by 2020.
The PNG project, a joint venture between ExxonMobil (41.5 per cent), Oil Search (34 per cent), Santos (17.7 per cent) and others, will include two processing trains containing 6.3 million tonnes a year from late 2013 or early 2014.
It will be the largest private investment in PNG, and is expected to contribute more than $30 billion to the nation's economy over the life of the project. The managing director of Oil Search, Peter Botten, who has flown to PNG for Tuesday's announcement on a final investment decision, said the project was progressing well.
''It is very pleasing to have signed the first of four anticipated sales and purchase agreements for the sale of LNG from the project,'' he said.
''This sales and purchase agreement signals the commencement of a long-term relationship and we look forward to working closely with Sinopec in the future.''
A source said the joint venture was awaiting development licences to be granted over the weekend. ''If that happens then it is good to go and Tuesday will be a great day,'' the source said.
That statement is true for all partners but particularly Oil Search, which was forced to abandon plans to sell a 3.5 per cent stake to International Petroleum Investment Co because the time required to receive shareholder approval would have taken it too close to the FID deadline. Instead, it embarked on an 11th-hour capital raising comprising a $895 million fully underwritten institutional placement and a $100 million share purchase plan.
Oil Search shares rose 2c to $6.02, while Santos fell 25c to $14.90
