SYDNEY (AFP) –
Energy giant Exxon Mobil Tuesday approved a 15 billion US dollar liquefied natural gas (LNG) project in Papua New Guinea, potentially the largest ever such deal for the impoverished Pacific country.

The venture's United States-based lead partner said the green light was conditional on securing binding contracts with two more Asian customers and finalising financial arrangements, expected by early 2010.

"We are pleased to achieve the important milestone of securing the approval of the co-venturers to move ahead with our project," said Peter Graham, managing director of Exxon's PNG subsidiary Esso Highlands.

"Pending completion of these sales and financing arrangements, significant project activity will commence in 2010," he added.

Exxon and the other partners -- Australia's Santos and Oil Search, Japan's Nippon Oil and Eda Oil, owned by PNG's government -- had previously indicated they would make a final investment decision Tuesday.

Instead, they extended the deadline to allow for completion of contracts for the project's full annual capacity of 6.6 million tons for 30 years.

Patersons Securities associate director John Curtin said the deal, "if it gets off the ground at these prices ... will double the size of PNG's GDP".

Australian trade minister Simon Crean said his government would lend up to 500 million US dollars for the project's development, through its export credit agency. Similar agencies in the United States, Japan, China and Italy have already offered debt financing.

"This project will provide a boost to PNG, the region and Australia," said Crean, adding that demand for LNG would boom as the world shifted to cleaner sources of energy.

"Beyond Australia?s competitive advantage and expertise in this field, the PNG development could enhance the significance of our region as a reliable global supplier of energy," he said.

Binding contracts have been signed for the sale of a combined 3.8 million tons per year from the project to China's Sinopec and Tokyo Electric Power Co in Japan.

Preliminary agreements which are yet to finalised have been reached with Osaka Gas Co, also of Japan, and Taiwan's CPC Corp.

Exxon Mobil said PNG's government had acquired a 16.6 percent stake, while PNG landowners took 2.8 percent.

"It's a very big deal for Oil Search, which owns 29 percent of the project, and Santos, which owns 13.5 percent of the project," Curtin said.