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LNG SHAKEY, EXXON DECLINES TO COMMENT.

AFP

PORT MORESBY — Energy giant ExxonMobil Tuesday refused to confirm reports of an arson attack on its 15-billion-dollar gas project in Papua New Guinea, saying only that police were probing an unspecified incident.

The National newspaper reported that trucks and heavy machinery were torched by local villagers at an Exxon quarry near Kaiam Ferry in the southern Gulf province of Kikori last Friday.

"No one was injured or directly threatened," ExxonMobil spokesman Miles Shaw told AFP, confirming that police were investigating an incident involving the liquefied natural gas project but declining to provide details.

"Police are carrying out their investigation so until that is complete it would not be appropriate to comment at this time."

Police contacted by AFP could not immediately comment.

The National said the attack was believed to have stemmed from ongoing landowner unrest about Exxon's gas project, which will include liquefaction and storage facilities in the Gulf of Papua region.

Gas production and processing facilities in the Southern Highlands and Western Provinces will be linked to the gulf by more than 700 kilometres (450 miles) of pipelines, and the entire project takes in a vast swathe of country.

Construction is expected to take four years, with first deliveries scheduled for 2014 to major customers in Taiwan, Japan and China.

ExxonMobil holds a 33.2 percent stake in the project with partners Oil Search Ltd (29 percent), the PNG government (16.6 percent), Santos Ltd (13.5 percent), Nippon Oil Corp (4.7 percent) and local landowners (2.8 percent).

Analysts estimate the project, potentially the largest ever such deal for the impoverished Pacific country, could double PNG's income.