Pipeline not a pipedream
Copyright 2000 Post-Courier (PNG)
December 7, 2000
COMMERCIAL contracts for gas from the planned Papua New Guinea to Queensland gas pipeline should be nearly complete by Christmas, one of the project’s partners said on Tuesday.
The news came as project director of the $A5 billion pipeline, John Powell, said plans were on track to have construction complete in 2005, two years behind the original estimate of 2003.
Oil Search Ltd managing director Peter Botten said he expected agreements between potential utility customers, such as Queensland’s Energex and Ergon, on the main contract terms by the end of the month.
“I think given the maturity of the discussions, we will make progress with a number of customers before Christmas,” he told reporters after addressing the sixth PNG Mining and Petroleum Investment Conference.
“We genuinely believe that what we have got on the table is fair and reasonable for both sides.”
Mr Botten’s comments follow the Australian Competition and Consumer Commission’s decision in October to grant interim approval for suppliers to jointly market the gas.
Producers include project leader Chevron Australia, Exxon/Mobil and Australian-listed groups Santos Ltd, Oil Search Ltd and Orogen Minerals Ltd.
The companies each hold various stakes in PNG gas fields and intend to sell gas through the planned pipeline once the complex contract talks are completed and a final decision is made on proceeding with the project.
One of the main stumbling blocks behind the delays in getting the customer contracts signed has been over the volumes of gas to be taken.
However, the Queensland Government’s release of its Cleaner Energy Strategy and its commitment to gas power in May was thought to have given the negotiations a boost.
Mr Botten said the energy policy had made pricing for the Queensland gas market “more predictable” and sparked a rise in the volumes originally estimated.
The risks attached to the project had also decreased due to oil producers Exxon/Mobil and Santos and the Papua New Guinea Government being locked into the project.
Mr Botten added the potential customers had proposed about 19 material changes to the draft agreements they initialled last July for the supply of 170PJ of gas.