Oil Search puts new emphasis on Papua LNG
Oil Search Ltd is moving its development focus in Papua New Guinea operations to the two-train Papua LNG (Elk-Antelope) project without waiting for the earlier plan to link it to a third-train expansion of the existing PNG LNG project.
Last year the proposed Total-operated development was planned to proceed in conjunction with a mooted expansion of ExxonMobil’s PNG LNG project, which included development of P’nyang field in the country’s western highlands.
The plan for linked projects, which would have resulted in three new trains built simultaneously at the PNG LNG plant at Caution Bay just west of Port Moresby, was part of an attempt to create development synergies and lower construction costs.
However, talks between ExxonMobil and the PNG government on the P’nyang development stalled in February.
Total had expected to reach final investment decision on Papua LNG this year, but it delayed development plans waiting for the conclusion of negotiations for the PNG LNG expansion.
The COVID-19 pandemic also impacted the timetable.
The Papua LNG project has received support and commitment from the PNG government, and it is reported that Total executives will head to Papua New Guinea in December to discuss forward plans.
Oil Search, a member of both consortia (as is ExxonMobil) now expects initial engineering work for Papua LNG to begin in 2022 with a final investment decision in 2023 and an on-stream date of 2027.
Total and its JV partners signed a gas agreement in September 2019 enabling Papua LNG to proceed. Legislative amendments to that agreement passed through PNG’s parliament earlier this month.
The project involves development of Elk-Antelope gas-condensate fields in the eastern highlands retention lease PRL 15. The scope includes an initial gas processing plant near the fields, a pipeline to ExxonMobil’s Caution Bay, and two Papua LNG trains at the PNG LNG plant.
Total is operator with 40.1%. Oil Search has 22.8% and ExxonMobil has 37.1%.
Oil Search added, however, that PNG LNG is still a major part of its operations in Papua New Guinea and a key revenue earner. The company has a 29% interest and all the project’s debt is expected to be paid by 2026, at which time the project will become a pure cash generation business for the company, it said.
Oil Search also confirmed it is planning a 75% reduction in its Papua New Guinea exploration expenditure.
The company intends to sell out of non-core exploration licences.
Source: Oil & Gas Journal