Osaka Gas Buys PNG Gas Fields
SYDNEY - Osaka Gas Co. Ltd. has agreed to pay up to US$204 million to acquire stakes in natural gas assets in Papua New Guinea owned by Horizon Oil Ltd., in the latest bet by an international energy company on the country's potential as a supplier of clean-burning fuels.
Japan is the world's biggest importer of liquefied natural gas – a natural gas cooled to a liquid so it can be transported by ship – and its utilities have been seeking supplies as a cheaper alternative to oil in power generation. Japanese companies are also keen to lock in new sources of gas to replace some existing supply deals, which are coming to an end as fields become depleted, and as a possible substitute for nuclear power.
Horizon Oil and partners including Japan's Mitsubishi Corp. and Canada's Talisman Energy Inc. are looking to combine natural gas from several fields in the flat forelands region of Papua New Guinea, and send the gas by pipeline to a proposed processing facility on the coast for export to Asia.
Mitsubishi took a first foothold in Papua New Guinea early last year, spending US$280 million to buy stakes in several discoveries and exploration blocks from Talisman.
Papua New Guinea – a Southeast Asian country best known for its jungles and tribal society – is set to become the world's newest significant energy exporter next year when the US$19 billion PNG LNG facility operated by ExxonMobil Corp. starts up.
Much of Papua New Guinea is lightly explored for oil and natural gas, increasing its appeal to overseas investors. Unlike rival LNG suppliers in the Middle East, shipments to Asia from Papua New Guinea won't pass through the Malacca Strait choke point near Singapore and freight charges are lower.
Wood Mackenzie, a U.K.-based consultancy, estimates Papua New Guinea has 26 trillion cubic feet of natural gas – roughly equivalent to the amount of the clean-burning fuel that the U.S. consumes in a year.
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