The joint operating agreement (JOA) outlines the rights and obligations of the Papua New Guinea liquefied natural gas (PNG LNG) project joint venture participants, covering all commercial aspects of the project including gas supply arrangements, unitization principles and voting requirements.

The agreement reportedly paves the way to the front-end engineering and design (FEED) phase of the project, subject to the conclusion of a gas agreement with the Papua New Guinea government.

Based on the JOA, Oil Search will fund 34.1% of FEED costs, which is slightly lower than the earlier cost sharing arrangement percentage of 36.6% due to some revisions to the estimated gas resources in each field, the exclusion of oil field liquids and a number of other factors.

Peter Botten, Oil Search’s managing director, said: The JOA was one of the key deliverables undertaken during the PNG LNG project pre-FEED work and the execution of this agreement demonstrates the alignment of the key PNG gas field participants behind the PNG LNG project.