The entry of Mitsubishi Corporation into Papua New Guinea under a US$280 million (A$269 million) gas alliance with Canadian independent Talisman Energy (TSX:TLM, NYSE:TLM) is a boost to hopes for a liquefied natural gas development in the Western Province, according to New Guinea Energy (ASX:NGE).
"The Western Province already has an enviable combination of substantial oil and gas prospects and active global exploration companies," New Guinea Energy chief executive officer Grant Worner said.
"Mitsubishi brings to the province the third vital element for LNG success; expertise in LNG production and marketing."
The Japanese conglomerate also brings more than 40 years of experience in the LNG industry, knowledge from 9 major LNG projects and proven LNG management skills, into play.
Mitsubishi has the lead role in planning and operating of the Donggi-Senoro LNG project in Indonesia, which is currently under construction.
"Mitsubishi also provides important links to the large and growing Japanese LNG market," Worner added.
Executive chairman Michael Arnett added the entry of Mitsubishi was another benchmark of the value of New Guinea Energy's licences in the Western Province.
Mitsubishi is taking stakes in 9 of Talisman's leases in Papua New Guinea's onshore Western Province with a view towards developing a 3 million tonne per annum LNG gas project.
This project will aggregate and monetise gas and condensate liquids in the Western Province, which could provide a commercialisation path for other explorers in the province.
The permits covered by the agreement are PRL 4, PRL 8, PRL 21, PRL 28, PPL 235, PPL 239, PPL 261< PPL 268 and PPL 269.
New Guinea Energy holds 50% working interests in the last two permits with Talisman holding the remaining 50% interest as the operator though this will drop following the Mitsubishi farm-out.
The two permits are believed to hold mean prospective resources of about 2 trillion cubic feet of gas at PPL 268 and 7 trillion cubic feet at PPL 269.
New Guinea Energy owns and operates another four licences in the province. The six licences cover a total area of more than 44,800 square kilometres.
All of the licences are located within an onshore basin that is a proven petroleum play hosting a similar petroleum system to the prolific offshore North West Shelf of Australia, and is one of the last available locations for highly prospective oil and gas exploration in South East Asia.
The company has 101 leads and prospects and total gross prospective resources of 6 billion barrels of oil equivalent.