Talks Between PNG, ExxonMobil Stall: Press

Talks between the government of Papua New Guinea (PNG) and ExxonMobil have stalled, Australian Financial Review reported November 22.  The development can potentially delay the proposed expansion of PNG’s LNG production and export capacity.

According to the news report, PNG petroleum minister Kerenga Kua in a statement expressed "disappointment" with the progress of talks after ExxonMobil, "refused to consider the state's proposed terms".

Kua said the proposed terms, which were not disclosed, are "based on international best practice". According to Australian Financial Review, they are understood to involve a higher tax rate and a more onerous domestic gas requirement than under a similar earlier deal for the separate but related Papua LNG project.

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 proposed expansion of PNG’s LNG production and export capacity is dependent on the successful conclusion of both the Papua LNG and the P’nyang gas agreements. The Papua LNG agreement, which was first signed in April this year, was sealed in September after it went for renegotiation. Oil Search, ExxonMobil and Total now need to agree on the fiscal and other terms related to the development of the P'nyang gas field to proceed with the LNG expansion.

But ExxonMobil said the discussions with the PNG government were continuing. "An agreement is needed before decisions can be made regarding front-end engineering and design for the three-train development at the PNG LNG plant site," an ExxonMobil spokesperson told Australian Financial Review.