10-06-02 The Papua New Guinea gas project has hit a hurdle but it certainly is not dead, Oil Search managing director Peter Botten said. Mr Botten told that while they were disappointed at losing the key Townsville power station bid, it was small in terms of the amount of gas Australia was purchasing from PNG.
He said they are looking at supplying between 100 to 150 PJ of gas a year into the Australian market, of which the Townsville project would have required about 15 PetaJoules. However, Mr Botten said the Townsville project was important because it would have added a significant boost to the whole project and kept the momentum going.
Mr Botten said at this stage, they are still confident of bringing gas into Australia as per the original schedule although there is a lot of pessimism in Australia that the project is now dead. He said the signing of the Gas Agreements sends a new signal to the market that PNG is ready to do business and it would also make their task of securing customers easier.

Both Mr Botten and Gas Ministerial Committee chairman Sir Moi Avei, while welcoming the signing, said it could have been signed ?a long time ago?. Prime Minister Sir Mekere Morauta, who officiated at the signing, outlined the opportunities for landowner involvement in the project.
Sir Mekere said the State and the companies have agreed that the State will take a 22.5 % share in the Hides field, which will supply about half the gas the project requires. ?2 % of that will be provided as free equity to the Hides area landowners, in accordance with long-standing Government policy,? Sir Mekere said. He said the Government has also decided that the National Gas Corporation (NGC) will be granted an option to buy 4 % at fair market value and the two affected provincial governments, Southern Highlands and Gulf, will be granted an option to buy 1 % at fair market value.
?That will leave the State with 15.5 % of the Hides equity. No decision has been taken on the use of that equity but our options include an appropriately structured trade sale, or a strategic alliance with another gas developer.?

He said the Government has also decided that PNG interests will take an additional share of between 15 % and 30 % in the downstream infrastructure, which will include the various pipelines and processing facilities, subject to finance being available on terms acceptable to the State.
?As well as the 2 % free equity to Hides landowners, and the stakes that will go to existing landowner companies such as Petroleum Resources Kutubu and Gobe, the Government has ensured that there will be other highly significant landowner involvement,? Sir Mekere said. ?There will be opportunities for landowners to participate in the downstream infrastructure. The National Gas Corporation, which represents all the provincial governments in the country, can also participate in downstream infrastructure.?