Part of the story was posted, this is the full update.
By Jacob Gronholt-Pedersen
SINGAPORE, Sept 25 (Reuters) - Papua New Guinea wants Total
SA <TOTF.PA> to lead construction of a new liquefied natural gas
(LNG) export project drawing gas from a disputed field instead
of the gas being used to expand an existing giant project, the
country's energy minister said.
The South Pacific nation began exports this year from Exxon
Mobil Corp's <XOM.N> $19 billion PNG LNG project, the largest
private investment in the nation's history. While an expansion
of that project is planned, Papua New Guinea hopes to see French
Total lead another LNG export plant.
Total earlier this year bought a 40 percent stake in Papua
New Guinea's biggest undeveloped gas deposit, the Elk and
Antelope fields, from local firm InterOil Corp <IOC.N>.
[see story]
However, Oil Search <OSH.AX>, a partner in Exxon Mobil's
project, has challenged Total's purchase of the stake, saying it
held the right to buy the stake. The dispute is due to go into
arbitration in November. [see story]
InterOil and Total want to develop the Elk and Antelope
fields and build a new LNG project in Papua New Guinea, while
Exxon Mobil and Oil Search see the fields as a potential source
of gas for an expansion of the PNG LNG project.
PNG energy minister Nixon Duban said gas from Elk and
Antelope was unlikely to be fed into the existing plant, and
that he would prefer a separate LNG plant to be built.
"For a European company like Total to choose Papua New
Guinea gives a lot of prominence to us as an investment
destination," Duban, who was attending an LNG conference in
Singapore, told Reuters in an interview.
Exxon Mobil said it couldn't comment on the matter. Oil
Search managing director Peter Botten, who was also in Singapore
at a separate conference, declined to comment on the matter, but
confirmed the PNG LNG project was currently producing at full
capacity of 6.9 million tonnes a year.
Total did not comment immediately and InterOil did not
respond to a request for comment.
Duban, who was appointed energy minister at the beginning of
the year, also said he welcomed Exxon Mobil's plan to expand its
existing project, but said there is no definite timing on that.
Exxon Mobil and its partners - including Santos Ltd <STO.AX> and
Japan's Nippon Oil Corp - are yet to decide where to source the
additional gas.
"When we discuss expansion, we should also be mindful of the
Elk-Antelope that will come aboard with two trains at a separate
LNG project," Duban said.
Oil Search already holds a 23 percent stake in the Elk and
Antelope fields, which it funded by selling 10 percent of its
shares to the Papua New Guinea government.
To acquire the stake in Oil Search, the government earlier
this year took an A$1.2 billion ($1.06 billion) loan, which will
be paid off using funds from LNG exports from Exxon Mobil's
project.
"Proceeds from the LNG exports will contribute towards
repaying those loans," Duban said.
The loan came under fire from former treasurer Don Polye,
while an independent commission is investigating whether the
government broke its own rules in taking on the loan.
[see story]
LANDOWNER CONFLICTS
The government has yet to fully identify which landowners
will receive royalties, a critical holdup that has raised the
spectre of unrest in the impoverished highlands where locals are
anxiously awaiting a historic windfall.
Exxon Mobil's agreement with the government sets aside a 2
percent royalty for landowners. The government initially hoped
to conclude vetting of clans that claim to own the land by
year-end, but that is now expected to slip into next year, Duban
said.
"Some people may feel they've been let down in certain parts
of the project areas," Duban said, but played down concerns the
conflicts could affect safety for energy infrastructure.
(1 US dollar = 1.1357 Australian dollar)
