Exxon Mobil Corp. says that sales and purchase agreements with liquefied natural gas (LNG) buyers and financing arrangements with lenders are now complete and its affiliate, Esso Highlands Limited, is proceeding with full execution of the Papua New Guinea (PNG) LNG project.

"The project team successfully negotiated this complex transaction for the project in a very difficult financial market," the company announced. "We believe our record of developing and operating world-class assets was a key component of this successful financing."

The integrated development includes gas production and processing facilities in the Southern Highlands and Western Provinces of Papua New Guinea; liquefaction and storage facilities with capacity of 6.6 million tons per year, located northwest of Port Moresby on the Gulf of Papua; and over 450 miles (700 kilometers) of pipelines connecting the facilities.

Participating interests include affiliates of ExxonMobil including Esso Highlands Limited as operator (33.2 percent), Oil Search Limited (29.0 percent), Independent Public Business Corporation (PNG government, 16.6 percent), Santos Limited (13.5 percent), Nippon Oil Exploration (4.7 percent), Mineral Resources Development Company (PNG landowners, 2.8 percent) and Petromin PNG Holdings Limited (0.2 percent).

The investment for the initial phase of the project, excluding shipping costs, is estimated at US $15 billion. Over its 30-year life, PNG LNG is expected to produce over 9 trillion cubic feet of gas. First LNG deliveries are scheduled to begin in 2014, following a construction period of about four years.

Neil Duffin, president of ExxonMobil Development Co., said, "The project will be developed in compliance with the highest standards for health, safety, environmental and social safeguards and will maximize the value of the resource, supporting the PNG government's objective to strengthen its economy and infrastructure base for the benefit of its people. The comprehensive national content plan focuses on development of the local workforce, expansion of supplier capability, and strategic community investment."

Funding for the PNG LNG project will come from the co-venturers and through market-rate loans arranged with export credit agencies and commercial sources. "The project team successfully negotiated this complex transaction for the project in a very difficult financial market. We believe our record of developing and operating world-class assets was a key component of this successful financing," Duffin added.

Tags: Exxon Mobil Corporation