Eaglewood Energy to benefit from Talisman deal to export Papa New Guinea gas

By The Canadian Press

CALGARY - Eaglewood Energy Inc. (TSXV:EWD.V - News) announced Thursday that it has an interest in one of the licences involved in the joint venture partnership announced earlier this week by Talisman Energy Inc. to export liquefied natural gas from Papua New Guinea.

Under the joint venture deal, Japan's Mitsubishi Corp. is paying about US$280 million to form a partnership on nine licences in the Southeast Asian country.

Calgary-based Talisman (TSX:TLM.TO - News) will hold about a 40 per cent stake in the licences, while Mitsubishi will hold 20 per cent.

Eaglewood says the nine licences involved in the Talisman-Mitsubishi transaction include PRL 28, in which the Calgary-based international oil and gas junior owns a 40 per cent participating interest and is currently operator.

As well, the nine licences completely surround Eaglewood's PPL 259 licence.

"This transaction is very positive for Eaglewood and all the Forelands players, as it introduces a large and experienced LNG player into the region which should result in a more likely and more rapid monetization of the natural gas reserves," said Eaglewood CEO Brad Hurtubise.

Talisman and Mitsubishi are looking to export about three million tonnes a year of LNG, natural gas that has been chilled into a liquid state, enabling it to be transported by sea in specialized tankers.

In the past, natural gas has been limited to markets that can only be served by pipelines. As LNG, the gas can travel to global markets where demand is greatest, allowing producers to fetch a much better price than if it were to remain landlocked.

Japan is a big user of LNG, and its demand for the fuel has only grown since a massive earthquake and tsunami nearly a year ago destroyed the Fukushima Daiichi nuclear power plant. Most of the country's reactors remain off-line, and it's likely the country will look to use other energy sources for electrical generation, like natural gas, in the future.

Japan's LNG imports jumped 12 per cent to a record 78.5 million tonnes in 2011.

Papua New Guinea, off the north coast of Australia, has huge gas deposits in its western provinces, which Canadian, Australian and other global companies are exploiting.