ExxonMobil Awards Two Additional Infrastructure Contracts for Papua New Guinea LNG Project

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Researched by Industrial Info Resources (Sugar Land, Texas)--Esso Highlands Limited, a subsidiary of the ExxonMobil Corporation (NYSE:XOM) (Irving, Texas), has awarded two further contracts connected with its proposed liquefied natural gas (LNG) project in Papua New Guinea. The two contracts cover preliminary work on infrastructure before full-scale construction begins in early 2010. The contracts will enable a final investment decision and project approval later in 2009.

The first contract, covering engineering, training, and support services in Papua New Guinea, and project team services for project management and construction, has been awarded to Eos Joint Venture (Brisbane, Australia), an unincorporated 50:50 joint venture between WorleyParsons Limited (ASX:WOR) (Sydney, Australia) and KBR Incorporated (NYSE:KBR) (Houston, Texas).

The contract, referred to as an "enabling agreement," extends through to the end of 2014 and follows from the current front-end engineering and design (FEED) project previously awarded to Eos for the same project. The project management and other services will be provided from Brisbane and from various sites in Papua New Guinea.

The second contract has been awarded to another joint venture, Clough Curtain, a 65:35 JV between Clough Niugini, a subsidiary of Clough Limited (ASX:CLO) (Perth, Western Australia), and Curtain Bros Papua New Guinea Limited (Townsville, Australia), a privately owned construction company which operates in Northern Australia, East Timor and Papua New Guinea.

This contract covers extensive construction work, including the development of roads, bridges, wharves, camp areas and other critical infrastructure and involves a work force of up to 900 personnel. Work will be carried out in multiple locations ranging from the river port area of Kopi to Hides in the Southern Highlands. Both Clough and Curtain have extensive experience in infrastructure project work in Papua New Guinea.

The Papua New Guinea LNG (PNG LNG) project is operated by Esso Highlands and is 41.5% owned by Esso Highlands, 34% by Oil Search Limited (ASX:OSH) (Sydney), 17.7% Santos Limited (NASDAQ:STOSY) (Adelaide, Australia), 5.4% by Nippon Oil Corporation (TYO:5001) (Tokyo, Japan), 1.2% by Minerals Resource Development Company Limited (MRDC) (Port Moresby, Papua New Guinea), and 0.2% by Eda Oil Limited. Eda Oil is a former subsidiary of MRDC and is now part of state-owned Petromin PNG Holdings Limited (Port Moresby). The final participation percentages are likely to change when the Papua New Guinea state nominees join the project as equity partners at a later date.

The project proposes to develop the petroleum resources in the Angore, Hides and Juha fields, and the associated gas fields of Agogo, Gobe, Kutubu and Moran in the Western and Southern Highlands provinces. The gas will be transported by a 700-kilometer pipeline to the liquefaction plant located about 20 kilometers northwest of Port Moresby, the nation's capital, from where it will be shipped in tankers in a liquid state to markets overseas. The liquefaction plant will have an estimated production capacity of 6.3 million tons per year.

The effect of the PNG LNG project on the economy of Papua New Guinea is expected to be enormous. Some estimates have suggested that the project could even double the country's gross national product and provide direct cash flows of up to $30 billion to the government and private landholders during the anticipated 30-year lifespan of the project.

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