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    Goverment urged to move quickly on US$450m loan
    Money from Japanese firm Itocho Corp to pay for State’s equity in gas project

    A POWERFUL parliamentary committee on petroleum and energy wants the Government to immediately facilitate the proposed US$450 million (K1.8 billion) loan from Itochu Corporation of Japan to pay for the State equity in the PNG-Queensland gas pipeline project.
    Chairman of the Special Parliamentary Committee on Petroleum and Energy and the Member for Pomio, Paul Teinstein, said the Government must also set up a separate company, and not Mineral Resources Development Company (MRDC), to form a joint venture with Itochu Corporation to participate in the gas project.
    "Clearly MRDC cannot be considered as a State vehicle to manage the State interest in the gas project in the light of the adverse publicity MRDC has been receiving," said Mr Teinstein.
    Mr Teinstein released a statement on the gas project after his committee and senior ministers, including Deputy Prime Minister Dr Allan Marat, were briefed on the gas project and the Napa Napa oil refinery in Parliament yesterday.
    Itochu Corporation officials and Petroleum Department officials were involved in the briefing sessions.
    The state will take up 22.5 per cent equity in the Hides gas (upstream) field, which will supply gas to Queensland as well as the infrastructure (pipeline) to transport gas.
    "The State's share of the equity investment is US$450 million. For national interest and the sustainability of the gas project, the State will have to participate in the entire project," said Me Teinstein.
    The gas agreement and the fiscal stability agreement have been signed between the state and developers in June 2002.
    Front End Engineering Design (FEED) is expected to begin in January 2003 and financing is expected by October 2003, said Mr Teinstein, who was a senior negotiator with the Department of Petroleum until he resigned to contest the general elections.
    Mr Teinstein called on the Government to "expeditiously" resolve the State's equity participation issues and the setting up of the PNG entity to manage all the State interest in the gas project.
    He also called on project proponent, ExxonMobil, to secure further markets in Australia to lift sale quantities of dry gas to at least 200 petajoules of annual export to make the project viable.
    Mr Teinstein expressed concern about key dead lines, which he said must be met by the state and the developers to ensure that "we meet our first contractual obligations to sell our gas to Australian customers by April 2006."
    The chairman said he would meet the Minister for Petroleum and Energy Sir Moi Avei and Minister for Treasury and Finance, Bart Philemon and Prime Minister Sir Michael Somare to fast track the funding arrangements with Itochu Corporation to safeguard the State interest in the project.
    He said he would also ask the ministers to quickly set up a PNG company quickly to manage the State interest in the project.
    He said said the success of the gas project was fundamentally crucial in any Somare/Marat Government efforts to bail out this country from it's current financial woes, hence the project must be given "first priority" in government support and resources, to bring the project on line by April 2004.
 
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