PNG LNG PROJECT COST STEADY AT US$15 BILLION

REUTERS

The PNG LNG project in Papua New Guinea will stay within its original cost estimates of $15 billion with the first sales by 2014, a government minister said speaking at a conference in Singapore on Wednesday.

Paul Tiensten, Papua New Guinea's minister of planning and development, said PNG LNG is still expected to make it's first sales of LNG in early 2014.

"We want to sell the first gas by 2014, that is our target... in case of some slippage, we have a contingency plan in place, but so far, we are on target," Tiensten said.

Media reports have suggested that the project could be delayed due to landowner disputes with the government.

But Tiensten said current landowner disagreements were among the approximately 60,000 landowners affected by the project, some of whom question the division of benefits from the PNG LNG.

"I think there are some dissatisfied people because they feel that they should be part of it. This project is a mega-project, it has generated a lot of expectations and a lot of infighting among people," Tiensten said.

LNG benefit-sharing negotiations late last year resulted in violence in Port Moresby and early this year, a fatal gunbattle erupted between tribal gangs arguing over a share of the project.

The Papua New Guinea government holds equity in the project, while Exxon Mobil (XOM.N: Quote) is the majority stakeholder. Other equity holders include Oil Search (OSH.AX: Quote), Santos (STO.AX: Quote), and Japan's Nippon OIL 5001.T.

PNG LNG has long-term supply agreements with China's Sinopec (0386.HK: Quote), Japan's TEPCO (9501.T: Quote) and Osaka Gas (9532.T: Quote), and Taiwan's CPC.

Construction of PNG LNG's 6.6 million tonne per year processing plant in Port Moresby began earlier this year.

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