PNG gas pipeline jobs in doubt

Michael Madigan and Matthew Franklin

BACKERS of the $6.8 billion PNG to Queensland gas pipeline are considering moving the project to the Northern Territory.

A project spokesman confirmed talks with potential NT customers were under way with a view to a possible route change.

Yesterday's collapse of the Sunrise Timor Sea Gas Project, which was to supply the NT's booming mining industry, has boosted the viability of the NT option.

Queensland Government representatives were advised the state could lose the project and its estimated 2200 jobs at a meeting last week.

Premier Peter Beattie will make an emergency dash to PNG next week to try to get the project back on track.

Peter Botten, general manager of Oil Search, with a 44 per cent stake in the project, said demand would ultimately dictate the route.

"The Queensland Government is aware that participants (in the gas pipeline) are negotiating with potential customers in the Northern Territory," he said.

"Which inevitably means the project may be heading that way."

Mr Botten said the Queensland coastal route was still preferred because of a strong customer base. But he said the consortium was determined to get the pipeline on to mainland Australia quickly to meet supply commitments to southern states.

The consortium is holding talks with its two biggest potential NT customers – MIM at McArthur River and Alcan at Gove.

Mr Beattie, who spoke on Wednesday with PNG Prime Minister Michael Somare about the project, said it would not stack up if it went into the NT.

"They don't have enough customers there," he said.

Mr Beattie said the Government was still keen on the project but was also working on developing coal seam methane for power generation.

The NT route, with a possible landing point around McArthur River, is feasible with a booming mining industry providing a ready market. An existing pipeline extending from Darwin to central Australia's Amadeus Basin provides a partial ready-made link into southern states.

The consortium is believed to be losing patience with Queensland customers who refuse to commit as an end-of-year deadline for project sponsors looms.