MILAN, Sep 27 (Class Editori) — Big moves on liquid gas even on the other side of the world. Australia and Papua New Guinea are negotiating a major deal regarding the 19-million-dollar PNG LNG project for the integrated development of gas extraction, production and processing spanning several provinces in New Guinea.
The deal is looked at with great interest by China and Japan, among the main clients of New Guinea’s gas, whose production started in 2014. China Petroleum and Chemical Corporation (Sinopec), Osaka Gas Company Limited, The Tokyo Electric Power Company Inc., and CPC Corporation, Taiwan’s public energy company, all take 8.3 million tons of gas from New Guinea from LNG thanks to long-term contracts. Since it started being operative, it is estimated that PNG LNG has produced more than 11 trillion cubic meters of liquid gas.
Australian company Santos, the main shareholder of the project alongside ExxonMobil Corporation, the Japanese JX Holdings Inc. and Mineral Resources Development Co., Papua New Guinea’s state-owned company, has received an offer by Kumul Petroleum Holdings, another state-owned company in Papua New Guinea, for the acquisition of an additional 5% stake in PNG LNG.
If the negotiation goes through, as it appears to, Kumul will increase its share in the project to 21.8%, achieving its Government's goal of deriving a greater share of profits from the exploitation of the country's natural resources. Santos' share would simultaneously drop to 37%, still ensuring the Australian Group's relative majority.
Santos, which is based in Adelaide and is currently the largest shareholder in the project, ahead of Exxon with 33%, received a project finance proposal for 300 million dollars, along with the conditional binding offer, accompanied by a check for 55 million dollars in escrow to secure the bid, which will remain open until December 31. The overall value of PNG LNG is estimated at 1.4 billion dollars.
Santos CEO Kevin Gallagher stated that the proposed deal "represents an opportunity to build strategic alignment for the future development of PNG's natural gas resources, including through the PNG LNG infrastructure".
PNG LNG's facilities are one of New Guinea's largest industrial investments, currently employing 2,700 local workers, of which 20% is female labor, while more than 200 small businesses work in the supply chain.
(Source:Class Editori)
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