Japan offers K2b gas proposition to Papua New Guinea

major Japanese energy companies have provided USD1 billion (K2.51b) proposal to the national government for the downstream processing of gas in the country.

Minister for Petroleum and Energy William Duma who revealed this in Parliament last Friday said the Itochi and Mitsubishi Gas Chemical company has provided a proposal for the downstream processing of ethanol and DME.

Minister Duma said this will not happen immediately under the current LNG arrangement with ExxonMobil however, there is a clause in the InterOil driven project that is coming on stream.

He said this in response to questions from Daulo MP Ron Ganarafo who asked during Question Time that the LNG gas will be shipped out by next year and whether there are plans in place to refine oil and gas for diesel, kerosene, cooking gas and other products.

“At that time we were negotiating with the worlds largest energy company ExxonMobil and as a government in the view of attracting investment we had to make a conscious decision to give away some concessions in order to attract investment for the first time in our country and that was a pioneer investment particularly in the LNG sector.”

Mr Duma said the agreement specifically provided that there be no gas set aside for downstream processing only in relation to the 9 trillion cubic feet of gas mainly from Hides 1 and Hides 4 and some condensates from the existing oil fields. 

“This agreement based on the 9 trillion cubic feet of gas will go for 30 years and as we know ExxonMobil is still conducting on-going exploration activities in the fields of Angore and Juha. 

“There is a review clause that when ExxonMobil and partners find more gas, than we will review the project agreement and the state will negotiate a different set of packages with the developer, including provision for downstream processing.”

He said the InterOil project in Gulf does have a clause which it recognises and project partners have agreed to set aside gas for downstream processing.

“I am pleased to again report to parliament that the government now has a definite and concrete proposal from a Japanese consortium led by Itochu and Mitsubishi Gas Chemical company.

He said another Japanese company has also shown interest and the government is looking at the economics of it.

The Post Courier