Papua New Guinea urged to speed up gas development or lose buyers

PAPUA New Guinea must accelerate development of its natural gas projects and lock in customers or risk losing out to other nations pushing coal seam and shale gas ventures, an oil and gas expert said, The National reports,

Independent researcher and the chairman of FACTS Global Energy, Dr Fereidun Fesharaki, gave the warning at the 11th PNG mining and petroleum investment conference in Sydney yesterday.

The US$15billion PNG LNG project under development by ExxonMobil, and partners Santos, Oil Search Ltd and the PNG government is on track to deliver its first shipment of LNG in 2014.

Fesharaki said PNG must act quickly to secure Asian markets or face competition from the cheaper Qatari LNG currently being sold to the US. “You have to be aware that this threat is there, so you have to act to shore up your customers,’’ he said.

“It is not possible to compete with Qatari LNG on economics … the only way to compete is to tie up the market.’’

Fesharaki said LNG production in Qatar cost about a quarter of that in PNG.

The Australian government has provided concessional loans of US$500 million to support development of the PNG LNG project, which is viewed as critical to the social and economic development of PNG.

Prime Minister Sir Michael Somare said in his opening address that Australian companies had already won contracts worth twice as much as the finance provided by the Australian government.

“My government is anticipating that LNG revenues will propel the economy to new heights and significantly improve our social indicators, which for too long have remained stagnant,’’ Sir Michael said.

PNG was expecting growth of 7.1% this year and 8% next year, he said.

But exporting gas from the remote Southern Highlands and Western was not without its challenges, according to ExxonMobil upstream project manager for the PNG LNG project Decie Autin.

Autin said a 700km pipeline, including 450km of sub-sea pipeline, would be required to transport the gas to an LNG facility near Port Moresby for shipment.

She explained that the pipeline must also traverse low lying topography, deep gorges and steep terrain that were subject to landslides and significant environmental areas, making it a complex undertaking.

An export terminal would operate 24 hours a day at the LNG processing site near Port Moresby, loading an LNG tanker for export every two to three days, she said.

Sir Michael said the government would continue to focus on providing a stable political environment and transparent mining regime to encourage further development.