Titanic Tycoon Plans Stake Sale Talks for $8 Billion Gas Project
Australian mining magnate Clive Palmer, who’s planning to build a modern replica of the Titanic, aims to start talks next year to sell stakes in a potential $8 billion natural gas project in Papua New Guinea.
“We’ve had interest from major petrochemical companies who want to joint venture” including Exxon Mobil Corp. (XOM) and Chinese companies, Palmer said in an interview. “We will talk to them at the appropriate time,” likely mid-2013 when field work is scheduled to be completed, he said.
Palmer, who owns a nickel refinery and is developing an $8 billion coal project in Australia, is seeking to tap surging Asian gas demand. Exxon, the world’s biggest oil company by market value, is developing a $15.7 billion liquefied natural gas venture in Papua New Guinea, among eight such projects being built in the two nations at a cost of about $200 billion.
“Exxon looks at a variety of deals,” Johan Hedstrom, a Sydney-based energy sector analyst with Bell Potter Securities Ltd., said by phone. “If they think that Clive Palmer has some licenses that are particularly prospective, they may be prepared to do a deal with him.”
Exxon doesn’t comment on commercial matters, Anna Awasa, a Port Moresby-based spokeswoman, said in an e-mail.
Palmer estimates his closely-held Mineralogy Pty has spent A$50 million ($51 million) this year on exploration in PNG, where it holds three licenses. Total SA, Europe’s third-largest oil company, this month formed an exploration partnership with Oil Search Ltd. that may lead to another LNG project in the country.
Mineralogy’s permits cover 43,170 square kilometers (16,668 miles) in the Gulf of Papua, west of PNG’s capital Port Moresby. A new estimate on the gas resource will be available late this year or early next, after early studies revealed potential for 22 trillion cubic feet of gas, Andrew Crook, of Crook Publicity, a spokesman for Palmer, said in an e-mail response to questions on Oct. 12.
“We are doing more work in the field because the more we develop the project, the better,” Palmer said, adding that it may cost about $8 billion to develop the project. “The stake sale size will depend on what we find.”
Palmer is holding a dinner in New York on Dec. 4 to unveil the completed design and engineering plans for Titanic II, he said this month in a statement. He plans to sail the ship from Southampton in the U.K. to New York on her maiden passenger voyage in 2016.
Estimates of Palmer’s fortune vary. He was ranked as Australia’s eighth-richest man with a fortune of A$3.85 billion by BRW magazine in May. Forbes estimated in February that he was worth $795 million. He isn’t ranked on the Bloomberg Billionaires Index.
Demand for LNG has seen Asia’s largest economies agree to buy more than $500 billion of Australian natural gas through 2036, even as Sanford C. Bernstein & Co. said this year the world may face an LNG glut in the next eight years.
“There’s certainly room for new projects to satisfy that demand, but there’s a lot of competition,” Bell Potter’s Hedstrom said. “Gas is being found with relative ease all around the world.”
LNG projects in Australia and Papua New Guinea face increasing competition from countries including the U.S. and Canada. From 2017, “it continues to look like a buyer’s market given the growing number of proposed projects competing for finite longer-term demand,” Adrian Wood and Kirit Hira, analysts at Macquarie Group Ltd., said in a Sept. 10 report.
Royal Dutch Shell Plc, Europe’s biggest oil company, signed an agreement last year with Papua New Guinea-owned Petromin PNG Holdings Ltd. to evaluate exploration and development opportunities in the country. Chevron Corp. and Woodside Petroleum Ltd. are among companies developing LNG ventures in Australia, set to overtake Qatar as the largest LNG exporter by the end of this decade.
Palmer, who last year dropped his fourth attempt in two years to sell shares in Hong Kong for his Resourcehouse Ltd. vehicle, said last month he expects to receive $500 million a year in royalties from Citic Pacific Ltd.’s iron ore mine in Western Australia once it reaches full production.