The operating agreement provides formal governance for the venture and incorporates all components including upstream, gas transportation pipeline and liquefaction.
"ExxonMobil is pleased to have the JOA executed as it is an important step in the progression of the project," ExxonMobil Development Company vice president Al Hirshberg said.
"Our focus now turns to resolving the fiscal terms and related matters with the PNG state which are critical for the project to enter the FEED (front-end engineering and design) phase."
Oil Search managing director Peter Botten said the move was a major milestone for his company.
"The signing of the JOA represents a major step forward in the commercialisation of our large PNG gas resources through the development of a world scale LNG project in PNG," Botten said.
LNG from the project will be jointly marketed with ExxonMobil acting as the joint venture's marketing representative.
PNG LNG will source gas from the Hides, Angore and Juha fields as well as associated gas from the operating Kutubu, Agogo, Gobe and Moran oilfields in the Southern Highlands and Western Provinces.
The gas will be treated at a gas conditioning plant at Hides before it is transported by pipeline to the proposed 6.3 million tonne per annum LNG plant located about 20km northwest of Port Moresby.
Under the JOA, partners in the project are operator ExxonMobil with a 41.6% stake, Oil Search (34.1%), Santos (17.7%), AGL Energy (3.6%), Nippon Oil (1.8%) and landowner interests (1.2%).
These stakes are expected to change when the PNG state nominees join the project at a later date with Oil Search saying it expects its interest in PNG LNG to drop to between 28-31%.
However, AGL continued to indicate that it may pull out of the project with its managing director Michael Fraser saying the "signing of this agreement is an important step towards a positive FEED decision following which AGL will consider options for disposing of its interests in its PNG oil and gas assets".
Meanwhile, the ACIL Tasman PNG LNG Economic Impact Study released by the joint venture predicts the project could potentially double PNG's GDP and create more than 7500 jobs - about 20% for local workers - during the initial construction phase.
About 850 jobs are expected to be maintained during production operations with the majority of these being held by PNG nationals.
"We have provided the ACIL Tasman report to the Government of PNG and will be working with the government and the community to ensure that PNG gains long term, sustainable benefits from the project," Hirshberg said.
"The use of local content including the training and development of a local workforce and suppliers will be a strong focus for the project."
The study also estimated that PNG's oil and gas exports would increase more than four-fold with average annual exports from the LNG plant expected to hit K11.4 billion ($US4.16 billion) compared to total PNG oil and gas exports of K2.6 billion in 2006.
It added that under the study's assumptions, the total direct cash flow to the PNG government and landowners from the project is estimated at $US31.7 billion over a 30-year project life.
