AGL signs gas sales agreement with PNG gas project

SYDNEY - Energy company Australian Gas Light Company (AGL) has signed a gas sales agreement with the parties involved in the A$4 billion ($4.4 billion) plan to pipe gas from Papua New Guinea to Australia.

The agreement replaces the conditional agreement announced on July 5, 2005, for the sale of around 1500 petajoules of gas over 20 years from the PNG gas project start-up.

The sale, which is expected to generate around US$400 million ($579 million), will be finished earlier than originally expected.

The transaction will now be completed in early February, rather than the second half of 2006 as originally planned.

Oil Search Ltd managing director Peter Botten said the early completion of the transaction highlighted AGL's commitment to the PNG gas project.

"It is a significant vote of confidence in the project and a major step in assuring this project reaches sanction," he said.

"It will provide further momentum to close other gas sales agreements, with new and existing customers, as project certainty increases."

The PNG Gas Project participants are Australian-listed Oil Search, US-based ExxonMobil, PNG's MRDC and Japan's Nippon Oil Exploration Ltd.

- AAP