Regional LNG: PNG LNG clears final conditions to proceed

Exxon Mobil Corporation on Friday announced that sales and purchase agreements with liquefied natural gas (LNG) buyers and financing arrangements with lenders are now complete and its affiliate, Esso Highlands Limited, is proceeding with full execution of the Papua New Guinea (PNG) LNG project.

The integrated development includes gas production and processing facilities in the Southern Highlands and Western Provinces of Papua New Guinea; liquefaction and storage facilities with capacity of 6.6 million tons per year, located northwest of Port Moresby on the Gulf of Papua; and over 450 miles (700 kilometers) of pipelines connecting the facilities.

Participating interests include affiliates of ExxonMobil including Esso Highlands Limited as operator (33.2 percent), Oil Search Limited (29.0 percent), Independent Public Business Corporation (PNG government, 16.6 percent), Santos Limited (13.5 percent), Nippon Oil Exploration (4.7 percent), Mineral Resources Development Company (PNG landowners, 2.8 percent) and Petromin PNG Holdings Limited (0.2 percent).

The investment for the initial phase of the project, excluding shipping costs, is estimated at US $15 billion. Over its 30-year life, PNG LNG is expected to produce over 9 trillion cubic feet of gas. First LNG deliveries are scheduled to begin in 2014, following a construction period of about four years.

Funding for the PNG LNG project will come from the co-venturers and through market-rate loans arranged with export credit agencies and commercial sources. ?The project team successfully negotiated this complex transaction for the project in a very difficult financial market. We believe our record of developing and operating world-class assets was a key component of this successful financing,? the Company said.

The project will supply four major LNG customers in the Asia region through long-term sales, including: CPC Corporation, Taiwan; Osaka Gas Company Limited; The Tokyo Electric Power Company, Inc.; and Unipec Asia Company Limited, a subsidiary of China Petroleum and Chemical Corporation (Sinopec). (alex)