Last month, AGL raised questions over the project’s future when it called a halt to front-end engineering and design work.
AGL made this move because estimated costs on the project had blown out from about $3 billion to $4 billion or more and the project had failed to attract enough customers.
But managing director Paul Anthony told Sky News Sunday Business that the upstream partners in the PNG gas project were considering new options, which would still bring gas from the PNG highlands to Australia’s east coast markets “around 2010 or 2011”.
Anthony said AGL still strongly supported the PNG pipeline project, but with customers refusing to commit, the current planned route and load would be difficult to implement.
“It’s a large pipeline development and the construction costs are very high, and it’s about getting the maximum amount of gas load at one time and we were dependent on particular customers to sign up to that load,” he said.
“What we might look is incrementally developing that pipeline.
“As the load appears we can build the pipeline out. It lowers your capital costs, it allows the project to be fast-tracked and it allows an incremental or organic growth of the PNG gas demand.”
Meanwhile, the Australian newspaper reports that Santos chief executive John Ellice-Flint and PNG Deputy Premier Sir Moi Avei met in Port Moresby last Monday to discuss Santos’ possible purchase of PNG gas for the Moomba plant and involvement in the upstream PNG gas project.
The newspaper reported Ellice-Flint argued that Santos was only interested in buying PNG gas provided it was liquids-rich and supplied under a long-term contract.
PNG originally wanted to strip liquids from the gas stream and pipe dry gas to Australia, but early this year Avei agreed to allow liquids to be exported for a short period to allow the gas project to achieve an early cash flow to help offset higher capital costs.
Santos owns 25% of the Hides gas field in PNG’s Southern Highlands. If this field was brought into the gas project and interests were unitised, Santos would have a roughly 10% stake in the upstream portion of the development.
