Papua New Guineans ecstatic about PNG LNG

TEARS of joy marked the financial close ceremony for the $US15 billion PNG LNG project in New York last week, with the project poised to transform the Papua New Guinean landscape.
Papua New Guineans ecstatic about PNG LNG Papua New Guineans ecstatic about PNG LNG Papua New Guineans ecstatic about PNG LNG Papua New Guineans ecstatic about PNG LNG Papua New Guineans ecstatic about PNG LNG

Speaking at a gala dinner in New York last Thursday, PNG Prime Minister Michael Somare said the PNG LNG project was "a history-making, nation-changing, life-transforming project".

He said the hope and optimism created by the 6.6 million tonne per annum LNG project would transform the landscape of PNG forever.

Last month, project operator ExxonMobil said it and its partners would proceed with full execution of the project after completing all financing agreements with lenders, which included export credit agencies and commercial sources.

Somare said the common resolve between all partners had produced valuable fiscal security for the project and made it possible for a mutual agreement on taxation arrangements.

"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.

The PNG government has estimated the tax proceeds from the project will start about four years after production begins and will average about 5-7 billion kina ($A2-2.8 billion) each year for the life of the project.

Somare said that ExxonMobil had provided a significant amount of co-financing and had gone "the extra mile" to ensure the development proceeded.

He went on to say that he was instructing ministers to also "go that extra mile" in the coming four years to make the project come together as smoothly as possible.

"Any delay in the project schedule would result in cost blow-outs that would hurt overall achievements and goals," the prime minister said.

"Having negotiated such a large loan, we will only be able to service this loan once LNG exports commence."

PNG LNG is scheduled to start producing 6.6MMtpa of LNG from 2014 and is expected to deliver more than 9 trillion cubic feet of gas over its 30-year life.

Partners in the project are operator ExxonMobil (33.2%), Oil Search (29%), IPBC (16.6%), Santos (13.5%), Nippon Oil (4.7%), MRDC (2.8%) and Petromin (0.2%).


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