The indicative terms of the agreement cover the supply of gas for a period of up to 20 years at up to 86 petajoules per annum.

Oil Search today told the ASX that the agreement with Mitsubishi Gas Chemical Company (MGC) and Itochu Corporation (ITC) would enable discussions to begin on a comprehensive gas supply agreement and for starting detailed feasibility work for the proposed dimethyl ether plant near Port Moresby, and on market development in Japan.

Oil Search managing director Peter Botten said his company was delighted to have signed the agreements with MGC and ITC, both well respected and highly experienced Japanese companies.

“The agreements allow MGC and ITC to carry out detailed feasibility work and to advance marketing efforts for the products. Oil Search will also commence detailed engineering and commercial activities to mature this development option and further define and finalise the optimum gas supply for this significant volume of gas,” Botten said.

Gas for the petrochemical plant could be sourced from a number of blocks in Oil Search’s substantial PNG portfolio.

Oil Search said it intends to enter into discussion regarding gas supplies with the relevant joint venture partners, including the PNG Gas Project Joint Venture.

“We believe this is a very positive step towards securing a petrochemical plant for PNG,” Botten said.

“It represents a cornerstone for PNG’s gas industry development and continues the company’s push to commercialise its substantial gas and liquids resources.”