“We believe PNG gas is highly competitive and its very large reserves would be suitable for large industrial customers over 20 or more years,” ExxonMobil spokeperson Tony Cudmore told EnergyReview.net.

“We have a number of conditional sales agreements in place targeting a 2009 start. With Cooper Basin gas declining, we believe there is room for both CBM and PNG gas.”

Under the multi-million dollar project, Exxon Mobil would pipe gas from the PNG highlands to Queensland and on to the Mooma facility in South Australia. From Moomba the gas could be piped to the south-eastern mainland states.

A final investment decision on the PNG-to-Brisbane pipeline is due to be made early next year.

But coalbed methane company Comet Ridge maintains that with Queensland CBM reserves being rapidly proved up, indigenous eastern Australian gas supplies will be more than enough to supply the gas needs of the eastern states and South Australia for decades.

“There simply will not be enough demand to justify importing gas into Australia,” Comet Ridge managing direcctor Andy Lydyard said.

“Coal seam gas is relatively new in Australia and customers have been unwilling to bet on it, but the situation is changing so quickly that businesses and governments can’t deny the potential of CSG anymore.

“Origin recently signed a deal with AGL to supply gas from its Spring Gully-Fairview fields at 340PJ a year for 15 years. CH4 and BHP are also supplying large quantities of gas from Moranbah to Townsville. Surely that shows coal seam gas is not just meeting a niche market, but can satisfy large, long-term industrial contracts.”

Lydyard argued that contracts would be decided on volume, accessiblity and price, and indigenous gas supplies had the edge in these last two factors.

“Queensland gas is some of the cheapest in the world – so it is very hard to see how imported gas coming through an expensive international pipeline can compete,” he said.

“If the PNG pipeline does end up going ahead, I suspect it will be driven by political support rather than strict economic criteria, and Australian taxpayers could end up subsidising a loss-making enterprise.”

But not all Queensland CBM players share Lydyard's strong views.

CH4 managing director told this month's Oil & Gas Gazette that there was room for both Queensland CBM and PNG natural gas.

"I believe the market on the east coast is big enough for us and PNG and others," Rozman said.

"It's not a them-or-us situation."