In the company’s quarterly report released Wednesday, Oil Search managing director Peter Botten revealed a “range of landowner and government issues” relating to the existing oil agreements was outstanding. The company had done a lot of work during the first quarter of this year in helping to resolve these issues, he said.

“These issues need to be concluded prior to finalising the new benefits sharing and business development agreements, which will cover both the oil and gas projects,” he said.

“While progress has been made on reaching a negotiated settlement, further work is required over the next few months, and this, together with finalising the new government and landowner agreements, remains a critical piece of business for the project participants.”

The PNG Government and landowner groups will begin meeting early next month as they seek to negotiate the Gas Project Co-operation Sharing Agreement (GPCSA). The forum has been scheduled for 10 days and will start on May 2 and will be critical in terms of allowing further development work for the project to go forward.

“The gas project co-operation sharing agreement forum will focus on discussing the benefits and sharing of benefits among the affected landowners, provincial governments and the local level governments,” Deputy Prime Minister and Minister for Petroleum and Energy Sir Moi Avei told the Post-Courier newspaper.

However, earlier this week the chairman of the Hiwa Tuguba Hides Association group, Libe Parindali, claimed the government had failed to deliver on its commitments under the memorandum of agreement, according to the Post-Courier. He said this had caused a delay in preliminary GPCSA negotiations.

Meanwhile, Botten confirmed earlier preliminary cost estimates for the project of $US2.5 billion ($A3.3 billion) based on an initial production capacity of 250 petajoules per annum.

“Considerable work took place on the PNG Gas Project during the quarter, with the focus firmly on progressing the many tasks, which need to be completed in order for the project participants to make a project sanction decision in mid-2006,” he said.

“The process of converting the existing Indicative Terms Agreements into Gas Sales Agreements (GSA) commenced with the signing of AGL’s GSA in January, with other GSAs expected to be signed prior to the project sanction decision.”