Gas project slated to sign funding deal

International consortium packages K40b financing

 

By SHEILA LASIBORI

 

INTERNATIONAL banks and export credit agencies (ECA) are set to sign a record financing agreement next month to develop the PNG liquefied natural gas (LNG) project.

American-based  Trade Finance magazine reported that a deal is set to close by mid March towards a US$14 billion (K40 billion) financing scheme for the development of the LNG project being spearheaded by ExxonMobil and a consortium.

It reported that the expected total project cost was US$18.3 billion (K50 billion) and once developed, would double the gross domestic product of PNG.

The Export-Import Bank of the US (Eximbank) last December approved the largest financing transaction in its 75-year history of US$3 billion to support US exports for the PNG LNG project.

This was moments after ECAs committed US$14 billion (K38 billion) towards the project costs.

Workers at over 55 US companies would provide goods and services for the project.

Eximbank, the official ECA of the US, five other ECAs and 17 commercial banks would provide financing for the project.

Also in December, the Australian government announced US$500 million (K1.4 billion) loan to support PNG LNG project development.

Project operator Esso Highlands Ltd, a subsidiary of ExxonMobil, holds 33.2% stake in the project while the other participants include, Oil Search Ltd (29.0%) Independent Public Business Corp (PNG Government, 16.6%), Santos Ltd (13.5%), Nippon Oil Exploration (4.7%), Mineral Resources Development Co (PNG landowners, 2.8%) and Petromin PNG Holdings Ltd’s subsidiary Eda Oil (0.2%).

Miles Shaw, Esso’s manager for public and government affairs, said finalisation of financing and completion of the last LNG sales and purchase agreement (SPA) with an Asian-Pacific buyer was expected to be completed in the first quarter of this year.

The outstanding SPA is with China Petroleum Co (CPC) of Taiwan, for an estimated 1.3 million tonnes of LNG per annum (mta) from the total 6.6mta of LNG from the project.

The previous three SPAs signed were with Japan’s Osaka Gas Co Ltd, for 1.5mta of LNG on Dec 22; with Tokyo Electric Power Co Inc (TEPCO) for 1.8mta of LNG on Dec 7; and on Dec 3 with UNIPEC Asia Co, Ltd., a subsidiary of China Petroleum & Chemical Corp (Sinopec) for 2.0mta of LNG.

These agreements are long-term and effective for a 20-year period.

The PNG LNG Project is an integrated development that includes gas production and processing facilities, onshore and offshore pipelines and liquefaction facility with the capacity of 6.6 million tonnes of LNG per year.

Meanwhile, work on the project at various sites in Southern Highlands province is progressively restarting.

“We will advise when all sites have returned to normal operations,” Mr Shaw said.