Exxon Starts Competitive Bidding for PNG LNG Plant

By Angela Macdonald-Smith

Oct. 16 (Bloomberg) -- Exxon Mobil Corp., operator of a proposed $11 billion liquefied natural gas venture in Papua New Guinea, said it started competitive bidding for the construction of the gas processing part of the project.

Bechtel Group Inc. and Chiyoda Corp. will compete against each other for the contract to build processing, storage and loading systems for 6.3 million metric tons a year of LNG output, Exxon's Esso Highlands Ltd. unit said today in an e-mailed statement. The contract will probably be awarded by late 2009 and construction will start in 2010, it said.

Exxon and its partners, including Oil Search Ltd. and Santos Ltd., want to tap demand for LNG that the U.S. company estimates is set to increase by more than 4 percent annually to reach almost half a billion tons a year by 2030, about 15 percent of global gas demand. They decided in May to start initial engineering work, known as FEED, on the project.

``Exxon Mobil is pleased to have the first phase of the LNG plant FEED completed and we look forward to a successful tendering process leading to the downstream engineering, construction and procurement contract,'' Peter Graham, venture manager at Exxon Mobil, said in the statement.

The Papua New Guinea plant, to be built about 20 kilometers (12.4 miles) northwest of Port Moresby on the Gulf of Papua, is scheduled to start shipments in late 2013 or 2014.

KBR, WorleyParsons

Eos, a venture between KBR Inc. and Sydney-based WorleyParsons Ltd., is carrying out initial design and engineering work for the development of gas fields that will supply the project. Construction contracts for that work are also expected to be awarded by late 2009, Exxon said.

Exxon has 41.5 percent of the LNG project, while Port Moresby-based Oil Search has 34 percent, Adelaide-based Santos 17.7 percent, AGL Energy Ltd. 3.6 percent, Nippon Oil Corp. 1.8 percent, the Papua New Guinea government-owned Eda Oil Ltd. 0.2 percent and MRDC, held by local landowners, 1.2 percent. The interests will change when companies nominated by the government take stakes, Exxon said. AGL is in final negotiations to sell its share.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net