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Government to stand by Papua LNG deal

Positive news for Total-led LNG development in Papua New Guinea

Total’s planned $15 billion Papua liquefied natural gas development in Papua New Guinea has received a boost after the government confirmed it would stand by an earlier gas agreement.

The recently installed government revealed plans last month to review a gas agreement signed in April for the proposed LNG project in PRL 15.

However, PNG’s Minister for Petroleum, Kerenga Kua, revealed over the weekend the government would stand by the original agreement “in the best interest of the State”.

“However, the State has reserved its rights to discuss a shortlist of matters to be discussed with the developers,” he added.

“We believe that what we have discussed and agreed to are favourable and will not affect the general economics and fiscal terms of the Papua LNG Gas Agreement, however those matters are of relevance to the State and this will be placed on the table for consideration by the joint venture partners.”

Kua said discussions with the Papua LNG partners would resume on Monday and were not expected to take more than two weeks to conclude.

The development of Papua LNG is a key component of ExxonMobil’s planned three-train expansion of its PNG LNG facilities in the country.

Papua LNG will underpin two 2.7 million tonne per annum LNG trains, while ExxonMobil’s P’nyang field is expected to underpin a third 2.7 million tpa train.

Total waits on Papua LNG review

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Finalisation of the P’nyang gas agreement had been planned for the second quarter of 2019, but that was prior to the political changes which saw previous Prime Minister Peter O’Neill step down and be replaced by James Marape.

Oil Search, which holds stakes in PNG LNG, Papua LNG and P’nyang, welcomed the announcement by the government.

“Oil Search is committed to supporting the operator of Papua LNG (Total) and the government, in resolving any final questions on Papua LNG Gas Agreement, so that the P’nyang Gas Agreement can be finalised and the PRL 15 and PNG LNG joint ventures can proceed into the front-end engineering and design phase of the integrated three train development in a timely manner,” Oil Search managing director Peter Botten said.

“The Papua LNG joint venture is also working collaboratively with the PNG government on finalising the National Content Plan for Papua LNG. This plan is aimed at maximising the involvement of PNG citizens and local businesses in the development and operation of the Papua LNG Project.”

Papua LNG entails the upstream development of the Elk-Antelope fields; P’nyang comprises the development of the gas field of the same name tied back to PNG LNG upstream facilities.

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