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Exxon: Papua New Guinea LNG project to take about 8 weeks to restore production

SYDNEY, March 5 (Reuters) - ExxonMobil Corp said it would take about eight weeks to restore production at the Papua New Guinea liquified natural gas project (LNG), following a powerful earthquake that hit the country's energy-rich interior a week ago.

The 7.5 magnitude quake on Feb. 26 triggered landslides and flattened buildings, killing at least 31 people, and has affected the regional LNG market. The South Pacific nation has declared a state of emergency.

Exxon said in a statement on Monday that 300 non-essential personnel had been evacutated and work at the Hides gas conditioning plant in the highlands had turned to restoring camp and associated facilities.

"While the gas conditioning plant was safely shut in, there has been some damage to various pieces of equipment and foundation supports that will need to be inspected and repaired," it said.

"Initial visual inspections of the major processing equipment indicate that they may not have been significantly impacted," it added.

Exxon is the operator and largest shareholder of the project that includes a 700-km (435-mile) gas pipeline that connects gas reserves in PNG's jungle Southern Highlands to a coastal liquefaction plant. Oil Search Ltd and Santos are also project partners.

Oil Search said the Agogo production facility and the Moran field were the most affected by the quake, and major repairs will be required before production can restart. The timeframe to restart production through Agogo is still being reviewed.

Uncertainty around production from PNG has drained liquidity from Asia's spot LNG markets with buyers and sellers taking a wait-and-see approach before committing to trade, a market source said.

The PNG LNG project is considered one of the world's best-performing LNG operations. Exxon said earlier this month that together with its partners, France's Total SA and Australia's Oil Search, it plans to almost double the facility's export capacity to 16 million tonnes per year.

(Reporting by Jonathan Barrett; Additional reporting by Chris Thomas in Bengaluru; Editing by Daniel Wallis and Richard Pullin)

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