Exxon-led group to develop $15-billion PNG LNG project

ExxonMobil and its partners yesterday agreed to proceed with the development of the $15-billion Papua New Guinea (PNG) liquefied natural gas (LNG) project to meet the future demand for clean-burning fuel in the fast growing Asia Pacific region.

The project development will start in 2010 after completion of sales and purchase agreements with LNG buyers and finalisation of financing arrangements with lenders, said the Irving, Texas-based Exxon Mobil in a statement yesterday.

The PNG LNG project is an integrated development that includes gas production and processing facilities, onshore and offshore pipelines and liquefaction facilities and has a capacity of producing 6.6 million tons of LNG annually.

The Australian government said yesterday that it will lend up to $500 million ($A547 million) to the project sponsors of the PNG project through Australia's Export Finance and Insurance Corporation.

The Australian government is extending the loan since the PNG project would give a significant boost for Australia's economy as Australian exporters have been made preferred tenderers for contracts to the project worth $1.2 billion, with the potential for garnering further contracts exceeding $3 billion.

Financing for the development and building of the pipeline and liquefaction plant, which will be approximately 70 per cent of the total project cost is to be financed by US, Japanese and Italian export credit agencies and is partly yet to be finalised.