Recent talks between the companies seem to have put the $3.5 billion pipeline back to the top of the agenda although major shareholder in the project Oil Search (54.2%), said that the talks were part of the ongoing process and did not reflect a final decision. However it was confirmed that Oil Search hopes that a final decision will be reached by mid-year.

So far the pipeline has been hindered by the lack of sufficient foundation contracts although the Gladstone Queensland Alumina Refinery is now shaping as a likely customer, with a number of other companies waiting to see an engineering design before registering interest.

The Highlands Gas pipeline will stretch 3200 km from the Kutubu oil and gas fields in the Southern Highlands to the coast of PNG and then across the Torres Strait and down Cape York to transport natural gas to its final destination of Brisbane.

The Highlands Gas Project is a joint venture between Oil Search, operator Exxon Mobil Corp 39%, the PNG government’s Mineral Resources Development Corp 3.4% and Nippon Oil Exploration 3%.

The PNG Government retains the right to buy 22.5% of the project via a pro-rata reduction in the existing owner’s stakes.