INTERVIEW-Papua N.Guinea says can fund LNG stake; eyes penalty

By Fayen Wong

PERTH, April 21 (Reuters) - Papua New Guinea has enough money built up from a tax windfall to fund its stake in a proposed Exxon Mobil-led liquefied natural gas (LNG) project that could make up over half its economy, its oil minister said on Monday.

William Duma, Papua New Guinea Minister for Petroleum and Energy said the government may consider imposing a penalty for developers who abandon major gas projects to prevent oil and gas firms from sitting on leases for resource-rich lands.

"Unlike before, the government now has a lot of money and we have enough money to fund our equity in these LNG projects," Duma told Reuters in a telephone interview from Port Moresby.

"But if we need some more (money), we can then look at bonds as the last resort. But it will be for minor sums."

U.S. energy major Exxon Corp Corp (XOM.N) said on Friday it had reached a fiscal agreement with the PNG government for the $11 billion LNG project, clearing the final hurdle for the project to enter the front-end engineering design (FEED) phase.

Papua New Guinea has two LNG projects totalling about $17 billion on its drawing board.

Most analysts have strong confidence that Exxon Mobil's LNG project, in which the government will take a 22.5 percent stake or about $2.5 billion, will go ahead, thanks to the project's robust economics, relatively low cost and high liquids content.

Duma said Exxon Mobil had agreed to pay 30 percent corporate tax and that the gas agreement was expected to be ratified by mid-May.