Exxon takes over PNG gas project

Members of the PNG gas project include Orogen Ltd

By CNN's Ian McMinn

SYDNEY, Australia (CNN) -- Exxon Mobil has taken charge of the $2.5 billion Papua New Guinea gas project to secure crucial sales contracts.

The PNG project is designed to supply Australian-based customers, mainly the Queensland government, with natural gas and liquefied petroleum gas (LPG).

However the pipeline has been hit by delays, prompting a recent restructure of the PNG project which saw Chevron replaced as the sole operator.

Bill Threlfall, Exxon Mobil Exploration vice-president Asia, Russia and Australia, leads the new Owners Group management team.

Other members of the group are Chevron, Oil Search, Orogen, Santos, MRDC (a PNG company representing landowner interests) and JPP (Japan Petroleum PNG).

Began with recompressed gas

According to Orogen Minerals the PNG project was developed after significant quantities of natural gas were found while exploring for oil in the Papuan Southern Highlands.

At the time much of it was recompressed and re-injected into the oil wells at Kutubu, Gobe, Moran and Hides for recovery at a later time.

Exxon's contribution of its Hides gas reserves in 1999, effectively underpinning long term sales and supply contracts, lifted the petroleum giant's stake to 30 percent compared to Chevron's 8 percent.

Analysts thus were not surprised by the Exxon-led move, after Chevron completed the initial technical planning required to transport the gas to Queensland.

Orogen says that over the next 30 years approximately six trillion cubic feet of gas will be required to satisfy expected demand for PNG's target markets on Queensland's eastern seaboard.

However, given the new emphasis on securing future sales, some observers say the PNG changes are also being driven by rival projects being fast-tracked in the Timor Sea.

Orogen Minerals

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