On Sunday, Avei slammed a report in the Post Courier which last week claimed the government had withdrawn its support for the project after becoming frustrated with demands from Santos on the amount of wet gas to be piped to Australia.
The report claimed the government had discussed the status of the project at a meeting of the National Executive Council in Goroka last week.
Development of the much-hyped pipeline project, which has reportedly seen capital costs blow out to $A5.3 billion, has been looking increasingly doubtful following a decision last month by the Australian Gas Light Company, a 50% partner in the pipeline, to scale back front-end engineering and design (FEED) work.
In a thinly veiled attack on Santos, Avei said the people of PNG, in particular the landowners, had waited 16 years for the vast gas resources of the Southern Highlands to be developed and would not be held to ransom by private sector stakeholders.
“The government will not allow the project to be jeopardised by the commercial brinkmanship of licensees who may be pursuing an agenda that is contrary to PNG’s national interest and contrary to the interest of other licensees in the gas project fields,” he said.
“We expect the current and potential private sector stakeholders in PNG Gas project to respect the government’s gas commercialisation strategy and to abide by the terms and conditions of their respective petroleum licences.”
Avei also pointed to two other domestic gas development options currently being considered by the government including the development of the Konebada Petroleum Park, where a world-class petrochemicals plant is being proposed, and an LNG facility in the Gulf of Papua.
“In order to maximise value and opportunities for PNG, the gas commercialisation strategy must be underpinned by a foundation project and at this point, the PNG Gas project is the best option,” Avei said.
But he acknowledged that the project was now facing serious problems.
"Over the past 18 months, the viability of the project has been subject to increasing pressure due to factors that have been totally beyond the control of government,” Avei said.
In making the decision to scale back FEED work last month, AGL cited rising cost pressures and the lack of a committed foundation gas load. Since then managing director Paul Anthony said the company would now consider development of the pipeline in stages until those customers signed on.
Avei revealed other options currently being considered by stakeholders included re-routing the Australian pipeline to Mt Isa, replacing APC (a consortium of Petronas and AGL) as the Australian pipeline developer, developing risk management strategies to reduce the pipeline tariff and renegotiating gas prices and volumes at selected locations.
He added that a revised development program was expected to be finalised within weeks with the plan then to be assessed by the government and the other project stakeholders.
Avei said he will also be meeting with ExxonMobil, the operator of the project, in the coming fortnight to discuss the revised program.
