Exxon approves $15bn LNG plan

ExxonMobil and partners gave final approval yesterday to a $15 billion (Dh55bn) liquefied natural gas (LNG) project in Papua New Guinea, adding to the ten of billions of dollars that energy majors are betting on Asia's appetite for gas.

The widely expected approval, just three months after the A$43 billion (Dh143.1bn) Chevron Corp-led Gorgon LNG project was given the go-ahead, will allow shipments to start in 2014 to customers in Japan, China and Taiwan.

It will also pave the way for Exxon and partners, including Australia's Oil Search and Santos and Japan's Nippon Oil Corp, to seek additional gas to expand the plant's initially planned 6.6 million tonnes per year capacity, which could significantly boost its profitability.

"With global demand for LNG forecast to nearly triple by 2030, the PNG LNG project will be an important supply source to meet this future demand, particularly for the economies in the fast growing Asia Pacific region," Neil Duffin, President of ExxonMobil Development Company, said in a statement.

Exxon said the approval was pending completion of sales agreements with LNG buyers and finalisation of financing arrangements, expected by early 2010.

The venture has signed binding agreements for the sale of a 3.8 million tonnes per year (mtpy) of LNG to China's Sinopec and Japan's Tokyo Electric Power, but preliminary agreements with Japan's Osaka Gas and Taiwan's state-owned CPC have yet to be converted into binding ones.

Oil Search's Managing Director Peter Botten told reporters he was "very confident" that all the remaining aspects of the project would fall into place. Analysts have long considered it to be a forerunner among the nearly 16 planned LNG projects in the Asia-Pacific, after Exxon swiftly secured deals to underpin its full capacity.

PNG LNG could transform the impoverished nation of Papua New Guinea by doubling its gross domestic product.

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