ExxonMobil, PNG government to resume P’nyang gas negotiations

The Government of Papua New Guinea and ExxonMobil, operator of the PNG LNG project, will re-engage in negotiations for development of the P’nyang gas project in the country’s Western Highlands.


The intention to reopen the talks which stalled in February 2020 was announced in a joint media conference in Port Moresby on the 20th August.


PNG’s Minister for Petroleum, Kerenga Kua said that a letter of intent had been signed between the State and ExxonMobil (on behalf of the P’nyang joint venture) to demonstrate that both parties will go back to the negotiating table with a firm commitment to reach a deal.


He said a series of workshops regarding development will take place during the next couple of weeks and that he is optimistic that a P’nyang heads of agreement could be signed around end September leading to a gas agreement thereafter.


The original development plan, mooted as far back as 2018, called for the development of P’nyang as a one-train LNG addition to the existing two-train PNG LNG project and alongside TotalEnergies’ proposed two-train Papua LNG (Elk-Antelope) project in the Eastern Highlands.


A set of fiscal terms for the Papua LNG project was agreed in 2019, but the P’yngang segment of the plan (PNG LNG T3) collapsed last year when ExxonMobil would not countenance the PNG government’s push for increased benefits and walked away from the negotiations.


Peter Larden, new managing director of ExxonMobil PNG, said he hopes new negotiations will be fruitful.


“Together with our joint venture partners, we look forward to working closely with the PNG Government and landowners to progress the P’nyang field development proposal and secure the licences needed to develop this important resource,” he said.


The optimism comes despite the PNG government reneging earlier this month on the agreed terms for Twinza Oil’s proposed Pasca A gas development in the Gulf of Papua, a move analysts say underscores increasing political risk in PNG’s resources sector.


P’nyang includes two fields – P’nyang discovered by Chevron in 1990 and P’nyang South discovered by ExxonMobil in 2021 – about 130 km north-west of the main PNG LNG project field at Hides in the Central Highlands.


Proposed development would include construction of a new pipeline between P’nyang and Hides.


In the meantime, the Papua LNG project advanced on the 20th August with the passing of the Oil and Gas (Papua LNG Project) Amendment Bill 2021 in the PNG Parliament, providing TotalEnergies the right to proceed with pre-FEED and FEED operations before applying for a development licence.


The benefit agreement already signed for Papua LNG is for the PNG state to gain 51% of the project revenue with the TotalEnergies taking 49%, Prime Minister James Marape said in parliament the week of the 16th August.


The suggestion is that government negotiators will want a similar or even more favourable benefit split for P’nyang.


Source: Oil & Gas Journal