Senior PNG government officials are due to visit the villagers in the Southern Highlands later this week to discuss their complaints, with negotiations already under way between the villagers and Sir Moi Avei, the Petroleum and Energy Minister.

"We put a lot of faith in the ability of these people to negotiate these things," said an official from Oil Search, which is the major shareholder in the project.

Of the 15 million Kina ($6.14 million) being sought to reopen the valves, the villagers are demanding an upfront payment of 3 million Kina.

Production at the oilfields is not being hampered, just the transportation of the output to the terminal. The valve station that has been shut down is one of five that control the flow of oil from the Gobe, Moran and Kutubu fields to the terminal.

Oil Search has 52.6% of the Kutubu project, around 50% of Gobe and around 52% of Moran. It holds a further 37% of the proposed Queensland gas project.

Earlier this month the PNG pipe project received a long-needed boost when ExxonMobil said agreement had been reached with CS Energy for the sale of about 15 petajoules of gas a year over a 20-year period.

Oil Search shares yesterday closed 1c weaker at 69c.