PNG considers sovereign fund to manage LNG money

SYDNEY, Nov 12 (Reuters) - The Papua New Guinea government is considering establishing a sovereign wealth fund to manage an estimated $50 billion in future state income from a liquefied natural gas project being led by ExxonMobil Corp (XOM.N).

"The National Executive Council (cabinet) will consider establishing a sovereign wealth fund as a vehicle for the government's 19.4 percent equity," PNG Public Enterprise Minister Arthur Somare said in a statement received on Thursday.

"The gas development is expected to provide more than $50 billion in tax and dividends (over 20 years) to the PNG government," he said.

The venture, which also includes Australia's Oil Search Ltd (OSH.AX), Santos Ltd (STO.AX), Japan's Nippon Oil Corp (5001.T) and PNG land-owners, is rushing to finalise sales agreements ahead of a final investment decision targeted for Dec. 8.

The $15 billion project has already signed preliminary gas sales agreements totalling 6.3 million tonnes per year (mtpy) with four Asian buyers, China's Sinopec (0386.HK), Japan's Tokyo Electric Power and Osaka Gas and Taiwan's CPC.

The project aims to produce 6.6 million mtpy.

Somare said PNG is working with Australia and the World Bank to ensure LNG revenues transform the country's economy and lift living standards. Resource-rich PNG has been plagued with crime and corruption for decades and remains aid-dependent.

"Major revenues from this venture will begin to flow in 2015-16," said Somare. "The government would like to be reassured that the government of the day will use these funds to improve infrastructure and service delivery throughout the nation." (Reporting by Michael Perry; Editing by Mark Bendeich)