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New PNG-Australia gas pipeline proposed
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September 22, 2006 - 7:59AM AdvertisementAdvertisement
A new, shorter design is being considered for the proposed Papua New Guinea-Australia natural gas pipeline that could keep the project alive, Paul Botten, managing director of Oil Search Ltd has said.
"I am actually reasonably optimistic in this as a way forward," Botten told reporters on the sidelines of Merrill Lynch's Australian investment conference in New York.
The new pipeline plan emerged after a week of discussions with several potential partners, Botten said. It trims about 400 kilometres from a previous design.
The new line would bring the Papua New Guinea gas produced by Oil Search to Moomba, a distribution hub in central Australia, through a connection with existing lines between Mt. Isa and Moomba, according to Botten.
He declined to comment on the cost estimates of a pared-down line versus the $US3.5 billion ($A4.7 billion) cost forecast for the original project.
The previous plan hit a roadblock last month when Australian Gas Light Co, the project's chief architect, said it might pull out due to a lack of firm buyers for the gas amid rising construction costs.
Companies involved in the project will be considering the new design over the coming weeks, Botten said.
Australian Gas Chief Executive Officer Paul Anthony told reporters approval by the pipeline's partners, including Exxon Mobil Corp, was not imminent.
"It's a significant change to the original plan, so they are going to take some time," he told reporters.
Although the new plan would not require constructing a new pipeline the entire distance to Moomba, it would force other pipelines that would be used to upgrade their facilities.
Australian Gas is responsible for designing and building the pipeline with Malaysian partner Petronas and has committed to buying about 40 per cent of the gas.
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