Exxon, Partners Award Papua New Guinea LNG Contracts

By James Paton

Exxon Mobil Corp. and its partners in the $15 billion liquefied natural gas project in Papua New Guinea said Chiyoda Corp. and JGC Corp. are among companies that won contracts to build the venture starting next year.

A joint venture that includes Australian engineering company Clough Ltd. and another with McConnell Dowell Corp. also received work orders, Irving, Texas-based Exxon said in a statement today. Clough, based in Perth, said in a separate statement that its contract is valued at more than $1 billion.

“The major work has now been awarded,” Miles Shaw, a spokesman for Exxon Mobil, said by phone from Port Moresby. The development is one of more than 12 in Australia and neighboring Papua New Guinea seeking to meet growing Asian demand for less-polluting alternatives to coal and oil.

The largest U.S. oil company and its partners, including Oil Search Ltd. and Santos Ltd., approved the project yesterday.The assignment given to Chiyoda and JGC covers the building of the natural gas processing facilities. The engineering and construction companies said today that the building of the plant will require 8,500 workers at the peak of work.

Saipem SpA of Italy and Spiecapag of France will receive pipeline contracts, Exxon said. Clough will work with U.S. engineering and construction company CB&I and expects to employ about 1,200 people at the height of construction, it said.Clough in September won a 20 percent share of an A$2.7 billion ($2.5 billion) engineering and construction contract awarded by the Chevron Corp.-led Gorgon LNG venture in Australia.

PNG Economy

Construction will proceed only after Exxon and partners complete agreements with customers and lenders, the companies said. Oil Search Managing Director Peter Botten told reporters yesterday that the group was confident that they will finish those transactions in a timely way. Oil Search estimates that Papua New Guinea’s economy may double in size because of the project.

The companies said they will build a plant near Port Moresby with capacity to produce 6.6 million metric tons of LNG a year. Gas will be piped 710 kilometers (441 miles) from fields in Papua New Guinea’s highlands for processing into liquid form and transportation by ships to Asian customers. Exports are scheduled to begin by late 2013 or 2014.