India's Oswal Group Ltd, which developed the $630 million Burrup Fertilisers project, in the Pilbara's Burrup Peninsula has selcted Papua New Guinea as the site for its next ammonia/urea plant.
India's Oswal Group Ltd, which developed the $630 million Burrup Fertilisers project, in the Pilbara's Burrup Peninsula has selcted Papua New Guinea as the site for its next ammonia/urea plant.
This follows a decision by Japanese companies Itoshu and Mitsubishi Gas Chemical to build a methanol plant in PNG, rather than the Burrup Peninsula.
The latest news highlights the difficulty facing Western Australia in attracting downstream resource processing projects, in light of the high and rising costs associated with the area.
In an interview with WA Business News in April this year, Burrup Fertiliser Ltd chairman and Oswal projects promoter Pankaj Oswal indicated that the gas price was an issue for his company.
"We would love to do this project in WA, but I cannot justify the gas price to the board or the banks," he said.
In an announcement to the Australian Stock Exchange Mr Oswal said today that the company was keen for a repeat of the success it enjoyed at the Burrup site.
The full company announcement is printed below
Oil Search is pleased to announce the signing of a Memorandum of Understanding (MOU) with Oswal Projects for the supply of 50 PJ of gas per annum to a proposed world scale ammonia/urea plant, to be located in the planned Konebada Petroleum Park near Port Moresby. The MOU provides the commercial framework for the negotiation of a comprehensive Gas Sales Agreement (GSA). Subject to the successful completion by Oswal of a comprehensive feasibility study, commencement of gas sales to the plant is targeted for 2010.
Oswal Projects is affiliated with the Oswal Group of Companies in India and is the primary stakeholder in the recently commissioned Burrup fertiliser facility in Western Australia.
Mr Peter Botten, Oil Search's Managing Director, said:
"We are pleased to have signed this agreement with Oswal Projects, a group which has a proven ability to develop large scale fertiliser projects. The natural gas required by the ammonia/urea plant, together with the gas requirements of the proposed methanol/DME facility of Itochu and Mitsubishi Gas Chemical, provides the critical mass necessary for the development of a petrochemical hub to be located within the proposed Konebada Petroleum Park. It also helps to underpin the economics of the
proposed spur pipeline from the PNG Gas Project pipeline to the Port Moresby area. Oil Search plans to update its pre-FEED study in respect of the new loads and, thereafter, commence work on the engineering studies on the spur pipeline in the near future.
These two potential petrochemical plant developments are key components of the multi-pronged gas strategy which is being pursued by Oil Search, to develop a domestic gas industry in PNG without compromising the ability to service the Australian market through the PNG Gas Project. Gas for the ammonia/urea plant could be sourced from a number of licences within Oil Search's substantial portfolio in PNG, and establishing the optimal supply arrangements will be part of Oil Search's accelerated exploration and appraisal programme for its gas resources.
The MOU also provides a framework for making excess power and water available in the Port Moresby area".
Mr Pankaj Oswal, Chairman and Managing Director of Burrup Fertiliser Ltd (and promoter of Oswal Projects), added:
"We are delighted to have signed this agreement with Oil Search, which is leading the efforts for in-country gas industry development in PNG. Oswal Projects is keen to repeat the Burrup success story in PNG. The proposed plant at the Konebada Petroleum Park for 2,600 tpd ammonia/4,500 tpd urea capacity would be the largest of its kind in the world. Oswal Projects will be working exclusively with Oil Search, and intends to embark on the bankable feasibility study immediately. "
