Addressing shareholders at its AGM on Friday, Oil Search chairman Brian Horwood said one of the key challenges would be to determine how royalties and revenue were distributed to stakeholders.

“The focus is now to ensure all government and landowner agreements are made to enable fair licence equity and benefits distribution to all key stakeholders in Papua New Guinea,” he said.

“These agreements will be difficult to achieve. However, we are confident in the support of government and the landowner groups who wish to see this project move to reality.”

Despite the hurdles, Horwood said the company believed first gas deliveries into Australia were still possible by the end of 2009, with the project due for approval by the Exxon Mobil-led venture later this year.

He added that the JV still hoped to welcome Santos as a gas customer.

“Along with other customers such as Alcan, QAL, Comalco and CS Energy, and we hope soon Santos, there appears ample demand for gas in Australia that should see this project move through to project sanction later this year,” he said.

As well as emphasis on the PNG Gas Project, Horwood said the company would continue focusing on commercialising its discovered gas resources in the country.

“We will promote in-country and export gas-based developments that will bring additional benefits to us and the country. PNG has substantial discovered gas resources and high potential for further significant gas discoveries,” he said.

Oil Search also announced that as a result of the AGL sale, the company is debt free, with just under $500 million in cash.

Oil Search owns about 70% of PNG’s oil reserves and more than 50% of gas reserves dedicated to the PNG Gas Project.