Oil Search Delays PNG LNG Expansion Feed

Papua New Guinea-focused Oil Search July 16 said that PNG LNG expansion front end engineering and design (Feed) work will be delayed following the new PNG government’s decision to review a gas agreement signed in April this year.

Oil Search was expecting the Feed work to start in the second half of 2019 but that assumed closing of the agreement with government on fiscal terms by mid-2019 for the development of the P'nyang gas field.

Oil Search, ExxonMobil and France's Total are working on developing the proposed Papua LNG project and the expansion of the existing PNG LNG plant. The Papua LNG project will encompass two LNG trains of 2.7mn mt/yr each and will be developed in synergy with the existing PNG LNG project facilities, operated by ExxonMobil.

The expected delay in the start of the Feed work has forced Oil Search to cut capital expenditure. The company has cut its expected capital expenditure for 2019 from previously guided US$545mn-US$655mn, it said.

“Total capital expenditure for the full year is expected to be between US$500 and $610mn, excluding the US$450mn Alaska option exercise cost. This is lower than previous guidance, largely reflecting revised timings for Feed entry for LNG expansion in PNG and development activity on the Angore field,” Oil Search said.

The company also trimmed its total production guidance from a range of 28-31.5mn barrels of oil equivalent to 28-31mn boe.

For the three months to June (Q2 2019) revenue was $378.9mn, down from $398.1mn a year ago.