Australia backs PNG gas project with $500m loan

The Australian government has backed the Liquefied Natural Gas (LNG) project in Papua New Guinea with a loan of $500m (AUD547m) to support the participation of Australian suppliers in one of the biggest natural gas projects in the region, and the largest single investment ever in Papua New Guinea.

“Australian exporters have already been identified as the preferred tenderers for $1.2bn of contracts. With the announcement of the project going ahead there is up to $3bn of project-related contracts potentially available for Australian exporters,” said Australian Trade Minister Simon Crean. The loan of up to $500m will be provided through Export Finance and Insurance Corporation (EFIC), Australia’s national export credit agency. Debt financing is also being provided by ECAs from the US, Japan, China and Italy.

The project is led by ExxonMobil, with Australian companies Oil Search and Santos holding more than 40% equity. It is a vertically integrated, upstream

natural gas and LNG development. The first phase of the project has an estimated value of $18.3bn and export production is expected to commence in 2014.

Other participants in the project include Mineral Resources Development and Petromin PNG Holdings. Much of the gas has already been ear-marked for export to China, following the signing of a 20-year deal between China’s Sinopec, China’s second biggest oil and gas company, and ExxonMobil.

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