By Jim Baynes, Papua New Guinea Correspondent PORT MORESBY, Dec...

By Jim Baynes, Papua New Guinea Correspondent
PORT MORESBY, Dec 10 AAP - Queensland Premier Peter Beattie said
today the proposed PNG Gas Project was in Australia's national
security interest, but warned proponents that the pipeline would
still have to make electricity cheaper for Queenslanders.
The visiting premier said he would be "shot" by the electorate
if he agreed to fixed long-term sales contracts which cost
consumers more in the long run.
Mr Beattie said he believed the $A6.8 billion project was still
"a goer", but stressed the project had to stack up commercially.
"We're interested, and we want to see it happen," Mr Beattie
told a business breakfast in Port Moresby.
"But I just want to underline so that everyone clearly
understands (that) is it's got to be done on commercial grounds.
"The price has got to be right and secondly the volume of what's
produced has to be sensible and long-term," Mr Beattie said.
"Having said all that, we will bend over backwards to facilitate
it."
The premier said it was in Australia's national interest to
invest more in PNG.
"From our point of view, it is in the national security interest
of Australia for there to be a secure, happy and developing Papua
New Guinea.
"After Bali and some of the ugly things in the world, it is in
the national interest of Australia to see such actual long-term
investments and long-term effort in ensuring there is a stable
economy and value-adding in this country."
Mr Beattie said however that Queensland would continue to
support rival methods of producing gas.
Earlier this year, the Beattie government snubbed the PNG Gas
Project for a big contract to supply a new power station in
Townsville.
But the gas project has since signed CSEnergy, the Queensland
government-owned power generator, to a 20-year gas contract.
The gas project has now secured more than 60 per cent of the
necessary base load to go ahead, although much of this is from a
deal with Sydney-based gas group AGL.
The AGL contract requires that gas from the PNG pipeline must be
available from the start of 2006. And pipeline operator ExxonMobil
needs three years to complete the front-end engineering, design and
construction stages of the project.
Mr Beattie played down the risk of violence affecting the
pipeline, which would run through lawless areas of the PNG
highlands.
"I don't see sovereign risk as being as serious a risk as some
people are making it out to be," he said.
Unpredictable landowners are a major impediment to resource
development in PNG.
AAP