PNG LNG Expansion Plans Take Shape: Oil Search
Partners in Papua New Guinea LNG (PNG LNG) have broadly agreed on a plan for roughly doubling the facility’s capacity, Oil Search said February 20, while also announcing a surge in revenue.
PNG LNG is operated by ExxonMobil (33.2%), with Santos (13.5%), National Petroleum Company of PNG (16.8%), JX Nippon Oil and Gas Exploration Company (4.7%), Mineral Resources Development (2.8%), and Oil Search (29%) also holding interests.
Oil Search said: “Productive, high level meetings were recently held between Oil Search, ExxonMobil and Total to discuss the results of the downstream development options that were received by the PRL 15 joint venture partners last December."
Total, operator of what has hitherto been a separate plan to develop Papua LNG, also indicated at its 2017 results earlier this month that it would be interested in talking to ExxonMobil about the possible merger of both LNG ventures.
“The partners have reached broad agreement on the preferred development concept, which will be presented to the PNG Government and other PNG LNG and PRL 3 joint venture partners for endorsement,” said Oil Search February 20.
While the current plant’s nameplate capacity is 6.9mn metric tons (mt)/yr, Oil Search said in its previous quarterly report that it expects it to run at or above 8.5mn mt throughout 2018 – and the expansion plan, which involves three trains, is intended to add an extra 8mn mt/yr of capacity. “We expect negotiations on cost sharing arrangements and the principles governing integration to commence shortly, which will enable the completion of downstream and upstream technical studies,” Oil Search said.
“Two of these [new] trains are likely to be dedicated to Papua LNG, supplied with gas from the Elk-Antelope fields, with an additional expansion train underpinned by gas from the existing PNG LNG fields and the P’nyang field," said Oil Search CEO Peter Botten.
“Oil Search expects that discussions with the PNG Government on project gas agreements will commence late in the first quarter/early second quarter of 2018, with a decision on the Front End Engineering and Design phase in the second half of 2018, subject to partner approvals and progress on Government negotiations,” it said.
Oil Search expects that the LNG from PNG LNG will be equity marketed and in preparation it has established an office in Japan. “We are increasingly confident about the demand outlook for LNG from PNG, with a material shortfall in supply developing in the early 2020s, and will be targeting key NE and SE Asian markets for offtake agreements,” it said.
Meanwhile, Oil Search announced the company’s total revenue in 2017 was $1,446mn, which is up by 17% from $1,235mn the year prior (all figures being US dollars).
“Sales revenue benefited from the rise in global oil and gas prices, with the average realised oil and condensate price increasing by 24% to $55.68/bbl and the average realised LNG and gas price 21% higher, at $7.67/mmBtu,” it said.
“This more than offset slightly lower sales volumes,” it added.
The company’s total production for the year was 30.3mn boe, compared to 30.2mn boe the year prior and net profit after tax surged 236% from $89.8mn to $302.1mn, it said.
The company gave capital expenditure guidance of $475mn-$575mn for 2018, which RBC Capital Markets said beat their expectation of $450mn.