Papua New Guinea
Gas To Go
Proposed Pipeline Could Boost PNG, Australia
| It would start in the heart of one of Papua New Guinea's highlands hotspots
and snake its way some 300 kilometers over land, then plunge into the Coral
Sea in the Gulf of Papua and weave its way through the Great Barrier Reef
to Townsville, Australia. When it surfaces, the US$2.5 billion PNG Gas Pipeline
would snake its way further east in search of key markets. At an estimated
length of more than 3000 kilometers, it would be the longest pipeline in
the southern hemisphere.
A final decision to construct this pipeline would turn current flaring of some six million cubic feet (80 tetrajoules) of gas daily-and re-injection of another up to 350 million cubic feet daily (4,700 tetrajoules)-to productive energy for Australian industries and consumers. There would also be other byproducts. - ADVERTISEMENT - PNG stands to reap direct economic benefits in the order of US$5 billion while Queensland, Australia would benefit to the tune of A$1.28 billion. Up to 2,200 jobs would also be created in Queensland, and additional regional income of more than A$350 million created, according to management.
Exxon Mobil and its partners including Oil Search Ltd., which has already secured two thirds of the total gas volume required, are searching for more customers and developing new gas fields as they move into the next phase of the project, Front End Engineering Design (FEED). This follows the signing on of two new customers, QAL and CS Energy, to conditional gas sales contracts. "This project has shown it is competitive into southern markets and as a result will make PNG and Queensland part of the huge pipeline grid linking NSW, Victoria, South Australia and Tasmania with multiple supply sources, creating a major regional gas market," PNG Gas Project managers Bob Reed and Peter Graham told a recent conference in Sydney. While Exxon Mobil's connections and funding are vital, Oil Search - one of PNG's real success stories - holds a pivotal role in the local, sometimes volatile, environment. Oil Search, which is listed on both the Australian and Port Moresby Stock Exchanges, prides itself on the fact that oil continues to flow since it developed the Kutubu oil fields. And it has a relationship of mutual respect with local landowners. Of the Huli landowners, Oil Search Community Officer Peter Botabar told Australian television's Business Sunday program, "They are smart, they might be wearing arse grass or bones through their nose but they are smart people. Never underestimate an intellect just because somebody is wearing some strange clothes." This attitude, and the role Oil Search has played in providing health, education and road infrastructure to this remote part of PNG, and the revenue they bring, has endeared Oil Search to the landowners who have not involved the company's properties in their local disputes. "It is the Hides community's desire to have the gas project to proceed. We have been waiting for last 10-12 years for have the gas project go ahead," Hides landowners told journalists recently. Three years ago when the gas pipeline was more uncertain, Oil Search looked beyond Papua New Guinea. Aided by royal favor in the Republic of Yemen, they explored and found oil, which they intend developing this year. Oil Search also begun drilling exploration holes in Egypt. PNG Treasurer Bart Philemon-who has designed PNG's last three budgets- knows the likely impact of the project on the national economy. "No other project past or present has a greater capacity to deliver stable and strong revenue flows to government and landowners; to broaden our economy; to provide skilled employment opportunities; or to make capital investments in productive capacity," he says. The FEED phase will see 12 months of intense work to sign on the final vital gas customers, develop oil and gas fields, and for PNG to make good on its optimism to secure finances for its stake in the pipeline. Only then can a decision on construction of this vital economic link can be made.
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