Exxon approves $15 billion project in Papua New Guinea

Exxon Mobil Corp., the largest oil company in the US, has approved with partners the development of a $15 billion liquefied natural gas (LNG) joint venture in Papua New Guinea, it has been announced.  The joint venture will be the countryÔÇÖs biggest resource project, and will supply LNG to China, Japan and Taiwan.  Irving, Texas-based Exxon and its Papua New Guinea partners will build a plant near Port Moresby, the nationÔÇÖs capital city, with the capacity to produce 6.6 million metric tons of LNG a year.  Gas will be piped 710 kilometers from fields in Papua New GuineaÔÇÖs highlands for processing into LNG before being shipped to Asian customers. Exports are due to begin by late 2013 or 2014.  Building will begin in 2010 after the companies complete agreements with their customers and financing arrangements with lenders. The project is likely to award five construction contracts worth ÔÇ£several billion dollarsÔÇØ within two days, according to Oil Search Ltd., a partner in the venture.  Papua New Guinea-based Oil Search will hold 29 percent of the venture; Adelaide, Australia-based Santos Ltd. has 13.5 percent; and Tokyo, Japan-based Nippon Oil Corp. 4.7 percent.  Exxon holds 33.2 percent; the Papua New Guinea government owns 16.6 percent; and affected landowners 2.8 percent.  It is estimated that as a result of the deal, Papua New GuineaÔÇÖs economy may double in size, and its exports triple. LNG sales from the project are set to exceed $100 billion over 20 years.  Papua New Guinea has a population of 6.2 million and an economy of $8.2 billion. The nationÔÇÖs economic growth was 6.5 percent in 2007 and 6.6 percent in 2008.  ÔÇ£With global demand for LNG forecast to nearly triple by 2030, the PNG LNG Project will be an important supply source to meet this future demand, particularly for the economies in the fast growing Asia Pacific region,ÔÇØ said Neil Duffin, president of ExxonMobil Development Company.  ÔÇ£The supply of cleaner-burning natural gas will also be critical in helping reduce global emissions.  ÔÇ£The co-venturer approval of the PNG LNG Project is a significant milestone. We look forward to applying our world-class execution capabilities and continuing to work together cooperatively with the PNG government to bring this resource to production.ÔÇØ  The plant is one of more than 12 planned in Australia and Papua New Guinea to meet growing Asian demand for more environmentally-friendly alternatives to coal and oil.  Tokyo Electric, JapanÔÇÖs biggest LNG buyer, has agreed to order 1.8 million tons of the fuel from the PNG venture annually for 20 years. ┬á  Last week, China Petroleum & Chemical Corp. completed a contract to buy approximately two million tons of LNG a year from the project.  *┬á┬á┬á┬á┬á┬á┬á *┬á┬á┬á┬á┬á┬á┬á *