Oil Search said yesterday that the partners in the huge Papua New Guinea liquefied natural gas project have agreed to start early works ahead of time, on the $US12 billion ExxonMobil-operated joint venture.
Oil Search managing director Peter Botten said in a statement to the ASX that early works include a range of infrastructure projects to allow full construction to begin in early 2010 – following a final investment decision in late 2009.
It’s as much confirmation the huge project, the largest in PNG history, will go ahead.
"The decision to proceed with early works, comprising an accelerated investment of approximately $US600 million ($A742 million) over the next 12 months, prior to the formal sanction of the project at the end of this year, is a major vote of confidence in the PNG LNG project," Mr Botten said in a statement to the ASX.
Oil Search’s contribution to the $US600 million is $US200 million ($A247 million).
"It demonstrates an increased level of commitment to the project by the participants, as milestones are progressively met," he said.
Oil Search said ExxonMobil had proposed to start on the early work before planned.
"Early Works include a range of infrastructure projects, such as the upgrade and repair of roads, construction of camps, wharf upgrades, early site preparation in the PNG Highlands, construction of training facilities and ordering of long lead items.
"The development of this infrastructure will facilitate full construction to commence in early 2010, following the Final Investment Decision which is targeted to take place in late 2009.
"This positive Early Works decision follows the recent signing of the Umbrella Benefits Sharing Agreement (Umbrella BSA) and substantial progress made on LNG marketing.
"The Umbrella BSA defines how benefits, including those provided for under the Oil and Gas Act, will be shared between the PNG Government, Provincial Governments, Project Area Landowners and Local Level Governments.
"The negotiation of the Umbrella BSA was a major exercise in democracy. Held in Kokopo, East New Britain over a five week period, it involved over 1,000 representatives selected by the communities to represent them in the discussions.
"The Umbrella BSA sets the framework for a series of individual licence-based agreements, to establish the final benefits distribution.
"As previously advised, significant progress has also been made on marketing the Project’s LNG and a further announcement on this is expected to be made soon."
"As announced by ExxonMobil recently, a number of contracts for early works activities have already been awarded, including a major construction contract for Upstream Early Civil Infrastructure to Clough Curtain JV, a joint venture between Clough Niugini Ltd and Curtain Brothers PNG Ltd."
Oil Search shares fell 17 cents or 2.8% to $5.80.
