Managing director Peter Botten made the claim as the company revealed it had signed a memorandum of understanding with India-based company Oswal Projects for the supply of 50 petajoules of gas per annum to the proposed plant.

Oil Search said the MOU provided the framework for a more comprehensive gas sales agreement expected to be signed later this year.

First gas sales from the proposed plant are flagged for 2010 following a comprehensive feasibility study to be undertaken by Oswal, the main stakeholder in the recently commissioned $A800 million Burrup ammonia plant in Western Australia.

Botten said the gas required for the proposed new plant, in conjunction with the gas required for the Itochu and Mitsubishi Gas Chemical proposed methanol/dimethyl ether plant, provides the “critical mass necessary for the development of a petrochemical hub to be located within the proposed Konebada Petroleum Park”.

“These two potential petrochemical plant developments are key components of the multi-pronged gas strategy which is being pursued by Oil Search, to develop a domestic gas industry in PNG without compromising the ability to service the Australian market through the PNG Gas Project,” Botten said.

He added that the development of the plant would also make possible a spur pipeline from the PNG Gas project, which would have a number of domestic benefits for the capital Port Moresby.

“It also helps to underpin the economics of the proposed spur pipeline from the PNG Gas Project pipeline to the Port Moresby area,” he said.

“Oil Search plans to update its pre-FEED [front-end engineering and design] study in respect of the new loads and, thereafter, commence work on the engineering studies on the spur pipeline in the near future.”

Burrup Fertiliser chairman and managing director Pankaj Oswal said the company, a subsidiary of Oswal Projects, was keen to repeat the success of the Burrup plant in PNG.

“The proposed plant at the Konebada Petroleum Park, with a capacity of 2600 tonnes per day of ammonia and 4500tpd urea, would be the largest of its kind in the world. Oswal Projects will be working exclusively with Oil Search, and intends to embark on the bankable feasibility study immediately,” he said.

Oswal’s Burrup plant is expected to produce up to 760,000t of liquid ammonia per year through the company’s 25-year, take-or-pay contract to purchase natural gas from the North West Shelf in WA.