The gas agreement outlines the fiscal terms and legal obligations under which the LNG venture will operate.

PNG LNG partner Oil Search said today the terms included a 30% tax rate and an additional profits tax that would apply once "a certain level of return has been achieved". This would provide a "fair split of the expected future cash flows from the project between the project proponents and the state".

The agreement's finalisation lets PNG LNG operator ExxonMobil start front-end engineering and design (FEED), which is expected to take about 16 months to complete. During this period, the joint venture will also be pursuing LNG sales agreements and securing project debt funding and all necessary permits and licences.

A final investment decision is expected late next year. The partners are planning for first cargoes in 2013.

The project which could more than double the size of PNG's economy within a mere six years according to Australian consultancy firm ACIL Tasman.

The Chamber of Mines and Petroleum told PNGIndustryNews.net that the government is likely to advance its gas agreement discussions with Liquid Niugini Gas now there is a blueprint to work from.

Liquid Niugini Gas CEO Dr Jack Hamilton told PNGIndustryNews.net that discussions had picked up considerably between his company and the PNG Government over the last week.

He said he looked forward to a gas agreement for Liquid Niugini Gas in the near future.

The PNG LNG project ownership consists of ExxonMobil at 41.6%, Oil Search at 34.1%, Santos 17.7%, AGL Energy 3.6% and Nippon Oil 1.8%. Landowner interests hold the remaining 1.2%, with Oil Search expecting sales to go to Asian markets in late 2013 or early 2014.

Liquid Niugini aims to build an LNG plant next to InterOil's refinery in Port Moresby and is backed by InterOil, Merrill Lynch and Clarion Finanz AG affiliate Pacific LNG Operations.

Once Liquid Niugini obtains government approval, production is expected to start in 2012 using gas sourced from the Elk-Antelope structure.