By Mohammad Bashir
Papua New Guinea's second LNG project which is expected to bigger and expected to produce 11 to 15 million tones got a step closer yesterday witnessed by Prime Minister sir Michael Somare, Treaurer and Finance Minister Peter O'Neill, Petroleum and Energy Minister William Duma, Gulf Governor Havilla Kavo and Police Minister Mark Maipaka and industry executives.
Pacific LNG Operations Ltd witnessed Liquid Niugini Gas Ltd, its Joint-Venture liquefied natural gas project company with InterOil sign a Project Funding and Construction Agreement (PFCA) and a Shareholders Agreement with Energy World Corporation Ltd. (AX: EWC) to construct a three million tonne per annum (mtpa) land-based LNG plant in the Gulf Province of Papua New Guinea (PNG), which is developed in two places, 2mtpa and 1mtpa expansion following immediately thereafter.
The agreement follow Pacific LNG Operations Ltd, September 2010 announcement of the formation of the partnership with EWC.
The Train 1 LNG plant would process an estimated 2.25 trillion cubic feet (Tcf) of natural gas over 15 years. In return for its commitment to fully fund the plant, the agreements provide that EWC is entitled to a fee of 14.5% of the proceeds from the sale of LNG from the plant, less agreed deductions, and subject to adjustments based on timing and execution. The Train 1 LNG project with EWC for the development of a modular LNG plant is designed to take gas from the proposed condensate stripping plant (CSP) being pursued in joint venture with Mitsui and accelerate the intended monetization of the Elk and Antelope resource, while eliminating the need for gas re-injecction into reservoir. The agreements provide a framework for the possible expansion of the plant's capacity to 8 mtpa of LNG. Henry Aldorf, President of Pacific LNG Operations Ltd, said
"These agreements signed today with EWC will enable Liquid Niugini Gas to have their LNG plants to be built economically compared with other new LNG Projects and provide LNG to the Asian market in a record time. As a result, I expect that the classical LNG project development approach will be changed by this modular LNG plant model as it will allow the economic development of LNG and provide reliable, clean and green energy to Asia."
The PFCA and Shareholder Agreements with EWC are conditional reaching FID no later than 31 December 2011. However, as previously disclosed the current joint venture project schedule is for FID to occur simultaneously for the LNG plant and CSP by June 30, 2011 and combined plant start up approximately 30 months after FID. This now adds blessing to the already arranged agreement between Gulf Provincial Government and Energy International to have a Petroleum Park established at Orokolo bay in Ihu District Gulf Province. InterOil's Senior Public Relations Manager Susuve Laumaea said they hope to get their Petroleum Development licence in March or before next year.
He confirmed that InterOil would be processing and stripping all LNG products in Gulf Province and would not need to pipe it to its Napa Napa Refinery.