INTERVIEW: UPDATE ON PNG LNG PROJECT

Peter Graham, Managing Director of ExxonMobil subsidiary Esso Highlands, responds to Business Advantage's questions on the Pacific region's largest ever resources project.

Business Advantage International (BAI): The construction stage of the PNG LNG project is now underway. What are the key milestones for the coming 12 months and how would you describe the progress so far?

Peter Graham (PG): 2010 was a busy year - and 2011 is set to be even busier. The Project's main contractors have all mobilised to Papua New Guinea. This includes contractors for the LNG Plant and Marine Facilities, the Offshore Pipeline, the Onshore Pipeline, The Hides Gas Conditioning Plant, and Komo Airstrip.

Initial work has focused on roads and bridges, construction site preparations, and camps and training facilities for the construction workforce. Recently the first foundations were poured for the LNG Plant and clearing of the onshore pipeline right of way and stringing of pipe is progressing; pipe welding will start in May.

The Project remains on track to make its first shipment of LNG in the fourth quarter 2014.

BAI: The project is involving a large number of subcontractors. Are there any tasks as yet unallocated that may come up for tender over the next year? If so, in what areas are they likely to be?

PG: The main EPC contracts were awarded in December 2009. Since that time these contractors have progressively awarded work packages to sub-contractors, including landowner companies. This process is substantially complete although some smaller contracts for materials and or services will likely be available. One way in which suppliers may identify opportunities is to make contact with our business resource center, the Enterprise Center. Interested businesses may register via our PNG Suppliers Dashboard which is available on our website at www.pnglng.com.

BAI: What progress is being made regarding skills development of PNG locals and the development of capacity among indigenous businesses?

PG: The Project has invested significantly in skills development. ExxonMobil recognizes that making the most of energy resources is more than just oil and gas production; it's also about developing people and capacity, and creating and delivering long-term benefits to local communities.

In November 2010, we officially opened the Port Moresby Construction Training Facility, which is a 150 million Kina (US$57 million) investment. This facility will train up to 1,000 PNG workers per year during the construction phase for the LNG Plant.

A similar but smaller Construction Training Facility at Juni in the southern Highlands is scheduled to commence training courses in September. Workers at both centers will be trained by PNG national instructors to Australian TAFE standards.

The project construction workforce is expected to peak at around 15,000. Currently more than 4,500 Papua New Guineans are employed directly on project activities.

In addition to training a workforce for the construction phase, we have commenced training for the Operations and Maintenance technicians for the production phase. A group of 75 young PNG nationals (20% women) commenced training in September 2010 at a residential facility in Port Moresby. After completion of basic training in PNG, these trainees will spend a year in Canada on advanced skills before returning to PNG.

Our PNG graduates training program is also underway with 15 assigned to various roles with Project contractors and an initial intake of 6 engineers recently transferred to Melbourne to participate in an 18 month graduate training program with Esso Australia.

The Project has also funded a business resource center in Port Moresby, the Enterprise Centre, to help develop business skills for landowner companies and to facilitate indigenous companies participation in Project-related business opportunities.

BAI: There has been some speculation about adding additional trains to the project. What is the current situation? What factors would influence a decision to expand the project?

PG: Our priority remains on the efficient execution of the existing 2-train project and we will assess potential opportunities beyond this as appropriate.

Business Advantage International would like to thank Peter Graham and ExxonMobil for responding to our questions and allowing us to reproduce the interview for our readers.

(Business Advantage International, http://www.businessadvantageinternational.com)