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    PNG Gas not dead: Oil Search
    Wednesday 18 December 2002, 16:05PM

    The $6-7 billion Papua New Guinea gas project is not dead after rival gas suppliers effectively locked up Australia's southern markets, according to project partner Oil Search.

    Shares in Oil Search - which holds a 44 per cent interest in the long-delayed project - fell 27 per cent or 22 cents to 55 cents at 1425 AEDT.

    The project's foundation customer Australian Gas Light Co - which had conditionally committed to taking 40-50 petajoules per annum (PJPA) over 20 years from 2006 - on Wednesday decided to source alternative gas to meet its current commitments.

    Mr Botten told AAP the PNG project will now focus on the Northern Territory and Queensland markets.

    "The project is far from dead, in fact the efforts of ExxonMobil have actually increased in both engineering and marketing terms and will be very substantial through January," Mr Botten said.



    Project operator, ExxonMobil has consistently said it had to commit to the front end engineering and design (FEED) phase - which is expected to cost "tens of millions" in early 2003 to meet AGL's gas delivery date of 2006.

    AGL's plans to source elsewhere effectively allows the project more flexibility in terms of its timing.

    Mr Botten said he was personally "shocked" by AGL's announcement given the project was making material progress to meet AGL's own deadline.

    "It was disappointing but I suppose it is up to AGL where it wants to go but ... they may not have been quite as confident as we are as where the project is going," he told AAP.

    "We had made some serious strides to bringing our project to a positive conclusion in the last couple of weeks.

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