Papua New Guinea gas pipeline plan dropped
SYDNEY: Exxon Mobil and Oil Search, Papua New Guinea’s biggest oil producer, have scrapped plans to build a $5.5 billion natural gas pipeline to Australia and will work on more profitable ways of exploiting fields in the country.
The pipeline project “experienced significant cost growth, eroding economics,” Rob Young, a spokesman for Exxon Mobil, the world’s biggest publicly traded oil company, said Thursday in Melbourne.
The partners will instead develop the gas fields for liquefied natural gas and petrochemical production, Oil Search said in a statement.
Oil Search said that with the global price of liquid natural gas soaring and gas prices in Australia remaining low, the partners in the PNG Gas Project Oil Search, Exxon Mobil, AGL Energy of Australia, Nippon Oil of Japan and the Papua New Guinea government decided the pipeline no longer made financial sense.
The pipeline project has been stalled for at least six years as the partners sought fuel purchasing agreements from customers in Australia.
Last August, the group that was to build the Australian part of the line stopped work on the project saying it was not feasible, increasing doubts the 4,000-kilometer, or 2,500-mile, line would be built.
The pipeline was to have run overland and underwater from Papua New Guinea’s highlands to Australia’s Queensland state, then down the northeastern coast and to central Australia. AGL Energy, Australia’s biggest energy retailer, Alcan and Rio Tinto Group’s Comalco unit had accords to buy gas from the project.
The total cost of developing gas fields in Papua New Guinea and building the pipeline was put at $3.5 billion in 2002. The estimated cost had risen since then to about $5.5 billion, including $2.5 billion for the Papua New Guinea part of the project and about $3 billion for the pipeline from the Papua New Guinea border to customers in Australia.
Exxon reports record profit
Exxon Mobil on Thursday posted the largest annual profit by a U.S. company $39.5 billion even as earnings for the last quarter of 2006 declined 4 percent, The Associated Press reported.
The 2006 profit topped the previous record of $36.13 billion, which Exxon set in 2005.
Revenue from the world’s largest publicly traded oil company rose to $377.64 billion for the year, surpassing the record $370.68 billion that Exxon posted in 2005.
Exxon said that fourth-quarter earnings fell on lower natural gas prices and shrinking gasoline margins.
Net income for the quarter slipped to $10.25 billion, or $1.76 a share, from $10.71 billion, or $1.71 a share.
