22-05-08 Esso Highlands Limited, an ExxonMobil Corporation subsidiary, as Operator of the PNG LNG Project, announced that the joint venture participants and the Papua New Guinea State have formally signed and executed a gas agreement.
The gas agreement establishes the fiscal regime and legal framework by which the PNG LNG Project will be regulated throughout its lifetime. It also sets the terms and mechanism for State equity participation in the project.

The gas agreement was signed on behalf of the State of Papua New Guinea by the Governor General, Sir Paulias Matane and the Minister for Petroleum and Energy, the Hon. William Duma and by the Project's joint venture participants. It was formally presented to the Prime Minister, the Rt. Hon. Grand Chief Sir Michael Somare at a ceremony in Parliament House.
Following the signing of the agreement, ExxonMobil announced that the joint venture participants have formally taken the decision to enter the next stage of project development, Front End Engineering and Design (FEED).

The FEED team will comprise personnel from ExxonMobil, the joint venturers and the FEED contractors based in Papua New Guinea, Australia, the United States and Japan.
"ExxonMobil is pleased to have the Gas Agreement executed and to move this Project to the next stage of development. During the FEED stage we will also pursue LNG sales agreements, secure the necessary permits and licenses, and undertake the financial planning necessary for a final investment decision," said Mr Peter Graham, Project Executive, ExxonMobil Development. "We look forward to working with the PNG government and our joint venture participants to maximize the value of the resource and provide long term, sustainable benefits to the community," said Mr Graham.

The FEED work will be conducted over the next 16 months with a final investment decision expected in the fourth quarter of 2009. FEED activities will include detailed work on optimizing facilities design, landowner, environmental and regulatory affairs, and the selection of an EPC contractor.
In parallel, the venture will be marketing the product to potential buyers in Asia and elsewhere and will be implementing its financing plan.

The PNG LNG project has the potential to become the largest project ever undertaken in Papua New Guinea. The project envisages an integrated development of the Hides, Angore and Juha Gas Fields as well as associated gas from the Kutubu, Agogo, Gobe and Moran oil fields.
The gas will be transported to the LNG plant near Port Moresby through more than 700 km of large diameter pipeline. The first LNG cargo is expected to be shipped in early 2014.

Equities of the PNG LNG joint venture parties going into FEED are:
-- ExxonMobil (Esso Highlands Limited as Operator), 41.5 %
-- Oil Search, 34.0 %
-- Santos, 17.7 %
-- AGL, 3.6 %
-- Nippon Oil, 1.8 %
-- MRDC, 1.2 %
-- Eda Oil, 0.2 %

Note: Interests will change when the Papua New Guinea State nominees join as equity participants at a later date.