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new pipeline customer speculation, page-2

  1. 840 Posts.

    That's interesting Phillip.

    Just as interesting is the following editorial from the same publication only last week.



    PNG National
    Editorial
    11.6.03

    Call It Quits On Pipeline Project.

    ONLY a very major contract will save PNG's Gas to Queensland pipeline project.
    For now major contracts are definitely not chasing PNG gas.
    And it is highly unlikely that they will be in the future, certainly not from that source.
    Last Friday a deal was signed between Canadian aluminium giant Alcan and Woodside Petroleum to supply 40 petajoules of gas from the Blacktip gas field in Western Australia.
    Late last year foundation customer of PNG gas Australian Gas Light (AGL) withdrew it commitment in favour of gas from Australian sources also.
    The effect of this is that immediately, other players who have been observing the state of play from the sidelines will also withdraw, taking with them the critical 100 - 150 petajoules of gas need before the project can be commercially viable.
    One of the companies which has watched PNG's progress with keen interest has been Rio Tinto's Comalco Ltd.
    It is highly likely that it will turn elsewhere now it realises the PNG gas pipeline project is very quickly losing its attraction.
    In quick succession, other interest companies and even those companies that have signed to take PNG gas will also withdraw.
    It goes to show that the hard-nosed world of high finance and business does not mix with politics - PNG style.
    The first bitter lesson to be learnt from this episode is that you never drag your feet once you have made a commitment as a player in a highly competitive market such as the supply of gas.
    Gas, especially, has a very small window of opportunity and it must be seized while it stays open.
    To be fair, the PNG Government has been quick off the mark where the gas pipeline project is concerned, compared with its record on other projects. Experience shows, however, that even that has not been quick enough.
    Had the previous Government of Sir Mekere Morauta moved faster on the gas project, the pipeline project may now be well advanced in the font end engineering and design (FEED) stage as scheduled.
    It is time to call a spade a spade and call it quits on the pipeline to Queensland project proposal. The project is dead.
    It is sad and a lot of time and energy has been expended but it is not the end of the world. These things happen all the time.
    Put it down as an experience, vow not to repeat it and move on. Rather than wallow in self-pity and cry foul, as seems to be happening, PNG ought to be moving aggressively to seek out other options and other markets and possibilities. As long as it has the resource, there will always be a market - big or small, however long it takes.
    For one thing, this final blow to one of the brightest promises for PNG's economic future to the tune of US$3.5 billion will drive PNG to look towards Asian markets more and more.
    That is logical. Australia is not short on Gas or Oil but Asian countries such as China, Korea, Taiwan and Japan are starved for energy sources.
    The recent high interest shown by Japanese companies in a potential methanol project using PNG gas should give PNG added impetus to head in that direction.
    Indeed, it should already have made internal decisions and arrangements to consolidate that position before it loses out on that too.
    Remember that first lesson: Move fast.
    Since Prime Minister Sir Michael Somare and his Petroleum and Energy Minister Sir Moi Avei returned from Japan three weeks ago, they should have moved all resources available to them to firm up on the Japanese interests.
    The PNG public is not interested to hear whether Sir Moi is disappointed or not in a failed project.
    It is far more interested in hearing from its minister what other options he and his departments have available now that this window of opportunity is closed. Otherwise the department and minister could well be accused of placing all our eggs in one basket and that egg might now be splattered on their faces.
    That is lesson number two: Have options and fall back positions always.
    Definite interest was shown already in 1992 in a LNG plant. Why was the door completely closed on that option?
    The other option, of course, is that should a more lucrative international arrangement not be feasible at present, it is time PNG sought options to develop the resource for the domestic market.
    At the start of the Kutubu Oil Project, a local oil refinery was deemed unfeasible but it is now at the tail end when the resource is dwindling.
    A domestic plant might not return the kind of revenue anticipated at present but the excitement and employment generated would be much welcome as opposed to sitting around idle waiting for a multi-billion project to come on stream.



    http://www.thenational.com.pg/0611/editorial.htm
 
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