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| TA Name | PNG Gas Project | |||
| Country | Papua New Guinea | |||
| TA Number | 4710 | |||
| Project Number | 39584- 01 | |||
| Fund Source/Amount[Closed] |
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| Thematic Classification |
Economic growth
Governance Environmental Sustainability |
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| Description |
The PNG Gas Project, as envisaged when TA 4710-PNG was approved in December 2005, had two interdependent objectives; (i) to commercialize the gas reserves of the existing Kutubu, Gobe and Moran oil fields and of the Hides gas field and, in so doing, (ii) to maximize oil recovery from existing oil and gas fields and facilities.
The PNG Gas Project was to develop mainly within or adjacent to the footprint of existing oil and gas production facilities (i.e., it was predominantly a `brownfield' venture). New development in `greenfield' areas mainly was to comprise field production facilities at Hides and new onshore and offshore pipelines. The PNG Gas Project aimed to produce 225 petajoules (PJ) of natural gas per year. The nominal life of the project was estimated to be 30 years, with first gas scheduled to be available for delivery to customers in Australia in 2009 after a three-year construction period. However, in August 2006 the developers of the Australian gas transportation and delivery system discontinued further front-end engineering and design (FEED) work due to a blowout in projected construction costs. After subsequent study, the project proponents announced on 1 February 2007 that they were formally abandoning their joint venture for the PNG Gas Project for the transportation of gas by pipeline to Australian customers. Project proponents subsequently began investigating liquefied natural gas (LNG) development options. In April 2008, the ExxonMobil-led joint venturers (comprising ExxonMobil, Oil Search, Santos, AGL Energy, Nippon Oil Exploration and the Mineral Resources Development Corporation (MRDC) reached agreement with the PNG Government on fiscal terms for an LNG project scheme. A Gas Agreement was subsequently concluded on 22 May 2008, which heralded the commencement of FEED activities. FEED activities will include identifying and agreeing financing arrangements. In November 2008, the PNG Government announced a deal whereby it would issue $1.6 billion 'exchangeable bonds' to the Abu Dhabi government-owned International Petroleum Investment Corporation in return for the State's 17.56% interest in Oil Search Limited. As such, multilateral financing for the State's equity interest in the project will not be required. |
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| Objectives and Scope |
The TA objective, as envisaged when TA 4710-PNG was approved in December 2005, was to develop a design for the PNG Gas Project which would contribute to local and national economic and social development. In order to prepare the possible provision of an ADB loan to the Independent State of PNG, as well as political risk insurance cover for commercial lenders, the TA was to ensure an acceptable feasibility analysis and was to specifically (i) review and prepare safeguards documents related to the environment, affected people, and involuntary resettlement; (ii) agree with the Government on arrangements for sound fiscal management of revenues accruing to PNG from the project; and (iii) contribute to a review of the economic and financial viability and sustainability of the project.
The main elements of the PNG Gas Project included (i) new wells, gathering system and gas processing facilities at Hides and pipelines to Kutubu; (ii) a new Central Gas Conditioning Plant to be located near the existing Kutubu Central Production Facility; (iii) sales gas pipeline running through the Kikori River basin to the Omati River landfall, and from there offshore across the Gulf of Papua to the international border with Australia. (For the majority of its length within PNG, Kutubu to Omati, the sales gas pipeline right-of-way (ROW) was to lie within or adjacent to the easement of the existing crude oil export pipeline). At the international border with Australia, the sales gas pipeline owner was to have become the AGL Petronas Consortium (APC) which was to build the continuation of the pipeline to markets in Australia. Associated with the PNG Gas project was to be the upgrade of existing roads and construction of new road segments along the pipeline route from Kikori in the Gulf Province to Tari in the Southern Highlands Province. |
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| Linkage to Country/Regional Strategy | The PNG Gas Project was expected to contribute to economic growth and private sector development in PNG, a main pillar of ADB's Pacific Strategy 2005-2009 and the PNG Country Strategy and Program. | |||
Safeguard Categories
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| Environment | A | |||
| Summary of Environmental and Social Issues |
Environment: The summary environmental impact statement (SEIS) for the PNG Gas Project was reviewed and posted on ADB's website in May 2006.
Indigenous Peoples: Project co-venturers have been operating oil fields and associated infrastructure in PNG since the early 1990s. Approximately 97% of the land in PNG is customarily owned by affected peoples. PNG has at least 800 linguistic groups who vary considerably in numbers and the size of their land holdings, as well as culture. The PNG Gas Project undertook extensive consultations with landowners and affected people, with the objective of preparing an indigenous peoples development plan (IPDP). The IPDP was intended to consider the desires and preferred options of the people affected by the project. |
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| Consultations Planned or Carried Out | Project proponents and the Government of PNG have consulted affected communities on many occasions in the recent past, in the context of the existing oil projects, and in the early stages of preparation for the gas project. | |||
| Responsible ADB Officer |
Barry Reid |
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| Responsible ADB Department |
Pacific Department |
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| Responsible ADB Division |
Pacific Operations Division |
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| Executing Agencies |
Asian Development Bank |
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| Timetable | ||||
| Fact-finding | 25 Oct 2005 to 27 Oct 2005 | |||
| Approval | 02 Dec 2005 | |||
| Financing Plan / TA Utilization |  Top
TA Amount |
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| ADB | Others | Gov | Total | Approved Amount | Revised Amount |
| $1,000,000.00 | $0.00 | $250,000.00 | $1,250,000.00 | $1,000,000.00 | $874,110.19 |
| Total Commitment | Uncommited Balance | Total Disbursement | Undisbursed Balance |
| $874,110.19 | $0.00 | $874,110.19 | $0.00 |
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