Exxon, PNG Sign Gas Deal

ExxonMobil PNG Limited and the government of Papua New Guinea have signed a gas deal.

The two parties have reached an agreement to supply up to 20 million cubic feet a day of domestic natural gas for 20 years to support government plans to improve the capacity and reliability of the country’s power supply, Exxon said in a statement Friday.

ExxonMobil PNG Limited is the operator of the PNG LNG Project.

The agreement is in addition to an existing gas commitment for Hides domestic power generation.

“This agreement enables a reliable long-term supply of natural gas to support Port Moresby’s urgent power generation needs,” said Peter Graham, ExxonMobil PNG managing director.

Under a memorandum of understanding, a portion of the natural gas supply allocated for domestic use will enable PNG LNG to provide up to 25 megawatts of electrical power, or about 20 percent of Port Moresby’s current generation capacity, for an interim period while the government addresses long-term power generation options. The remainder of the gas supply will be used to fuel a new state-owned gas-fired power generation unit expected to be located near the LNG Plant outside of Port Moresby.

Exxon stated that the agreement provides for the award of a petroleum development license and associated pipeline licenses for the P’nyang field in order to provide access to the long-term natural gas reserves needed for power generation, and to enable expansion of the PNG LNG Project, which could include the development of a possible additional train.

Esso PNG P’nyang Limited, the operator of the P’nyang field and an ExxonMobil subsidiary, and its coventure partners will commence preparations to drill a P’nyang appraisal well within two years of the awarding of the petroleum development license.

Preparations for appraisal drilling are anticipated to commence in 2015, subject to progress of technical work, permitting and budgeting, Exxon said.