PNG LNG Sees Strong Production Following Earthquake: Oil Search

Australia-listed Oil Search is on track to hit the upper end of its production guidance given a strong recovery in exports from the earthquake-impacted Papua New Guinea LNG facility earlier in the year, while the project’s downtime hit the company’s sales and revenue, the gas producer said in its quarterly report July 17.

“Since coming back fully online in late April, the PNG LNG Project has performed strongly, achieving an annualised production rate of 8.5mn metric tons per year over May and June, compared to 8.3mn mt per year for the 2017 full year,” the company said.

“Production rates have benefited from planned modifications to the Hides Gas Conditioning Plant and maintenance of the LNG trains in Port Moresby, undertaken while PNG LNG operations were shut down following the earthquake, as well as high levels of reliability,” it added.

For the second quarter of 2018, Oil Search’s total production was 5.40mn barrels of oil equivalent, which is up 12% year on year, while sales fell to 4.65mn boe, down 9%, and revenue slipped 11% to $262.8mn, the results showed.

The company said the weaker sales were due to the rebuilding of inventory and the timing of LNG shipments, with three LNG cargoes on the water at the end of the quarter.

“While the average realised oil and condensate price was 3% higher than in the first quarter, the second quarter LNG and gas price was 4% lower, due to a higher proportion of LNG cargoes sold on the spot market following the earthquake,” it added.

Oil Search’s 2018 production is expected to be in the upper end of its 23-26mn boe guidance range, which it dropped from 28.5-30.5mn boe following the earthquake, the company said.

Oil Search, which was established in PNG in 1929, has more than 98% of its assets in PNG, where it operates all of the country’s producing oil fields, and has a 29% interest in the PNG LNG project, operated by ExxonMobil (33.2%).