ExxonMobil: PNG LNG Project Protected from Credit Crunch

SYDNEY (Dow Jones Newswires), December 1, 2008

Exxon Mobil Corp., operator of the US$11 billion PNG LNG joint venture in Papua New Guinea, said it would be "foolish" to suggest the project was immune from the credit crunch but that Exxon's long-standing AAA credit rating provided "weather proofing" in the current conditions.

"We seek to borrow US$10 billion, and it would be foolish to say the project was immune from current market conditions but we have significant weather proofing (through Exxon's AAA rating) as well as one of the most credible LNG projects in the region," said Peter Graham, venture manager of ExxonMobil Development Company.

Speaking at the Papua New Guinea Mining and Petroleum Investment Conference, Graham said financial close for the project - the biggest ever developed in the country - was still planned for the fourth quarter of next year.

"The project is progressing well and on schedule," Graham said.

Exxon, which is coordinating financing for the project, will have access to long-term financing by way of its AAA rating that the company has maintained for over 100 years, said Graham.

"In late January we are planning to conduct a visit with 70 representatives from credit agencies and banks," he said.

French investment bank Societe Generale is acting as advisor.

Other major joint venture partners include Australia's Oil Search Ltd., Santos, Japan's Nippon Oil Corp., and MRDC, a PNG company representing landowner interests as well as the government.

PNG LNG going ahead would represent a major milestone for the viability of other large-scale gas projects in the country, with the Exxon-led operation potentially acting as a blueprint to navigate government and traditional landowner negotiations.

Last week Oil Search confirmed that the PNG government had agreed to use its stake in the oil and gas producer to raise A$1.68 billion from International Petroleum Investment Co., an Abu Dhabi government investment firm.

Exxon plans to appoint engineering contractors in the second half of next year, put out shipping tenders by the first quarter of 2009, with first cargoes of liquified natural gas scheduled to leave PNG in 2013-14.  

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