RESOURCES IN FOCUS Oil Search has a stake in Papua LNG and P’nyang. Credit: Oil Search
Big projects, big promises: the next LNG move Papua LNG, Pasca LNG and P’nyang are three key gas projects that will be on the radar in 2020. By David James he petroleum industry in Papua New Guinea is the nation’s largest export industry. Liquefied natural gas (LNG) accounts for more than half the nation’s total exports and there are also sizeable exports of hydrocarbon condensate and crude oil. PNG has some geographic advantages when it comes to exporting to big markets in Asia, including relative proximity and not having to go through the Strait of Malacca. PNG became a significant player in the gas industry in 2014, when the US$19 billion PNG LNG project, headed and operated by ExxonMobil, commenced production. Output increased to an annualised rate of 8.8 million tonnes per annum in the second half of 2018, a 46 per cent rise in initial production rates. A second major project is the proposed US$10 billion Papua LNG
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project in Gulf Province, which is headed by French oil company Total SA. The gas will be liquefied and purified at two facilities to be built at ExxonMobil’s PNG LNG plant in Port Moresby. It is estimated that Papua LNG will have the capacity to produce 5.4 million tonnes of LNG per year. Total will hold a 31.1 per cent stake in the venture, with ExxonMobil having 28.7 per cent and Oil Search 17.7 per cent. The remaining 22.5 per cent will be held by state-owned enterprise Kumul Petroleum Holdings, with 2 per cent allocated to landowners. A Memorandum of Agreement was
THE KEY IS TO MAINTAIN FAIR ACCESS TO THE MARKET AND FAIR ACCESS FOR THE COMPETITION. Jean-Marc Noiray
26 BUSINESS ADVANTAGE PAPUA NEW GUINEA
signed for Papua LNG in 2019 and its next stage will be front end engineering and design (FEED). Another project with potential is based on the P’nyang gas field, 130 kilometres northwest of Hides (the main source of gas for the PNG LNG Project). The original aim was to share infrastructure with the PNG LNG project, but the Marape government halted negotiations in early 2020, with government and developers unable to reach a benefit-sharing agreement. Had both Papua LNG and P’nyang received a green light in 2020, it was expected to have meant almost a doubling of PNG’s LNG production from 2024–2025 onwards. Now, it looks like they will be de-coupled, with Papua LNG starting first. Meanwhile, stakeholders are looking for a ‘Plan B’ for P’nyang (see page 28). The Pasca LNG project in the Gulf of Papua, PNG’s first offshore gas field, is operated by Twinza Oil and is moving towards development. The project is expected to produce 220,000 tonnes of liquefied petroleum gas (LPG) annually, of which 55 per cent will be condensate and 45 per cent will be LPG.
Boost to the economy The Papua LNG gas agreement also contains provisions for supplying some of the gas for domestic use – specifically electricity generation. There are also national content provisions that mandate work for local contractors. Managing Director of Total E&P PNG, Jean-Marc Noiray, says the principles of providing local content and domestic gas agreements are not new. ‘We have been practicing them successfully for years. The key is to maintain fair access to the market and fair access for the competition.’ Large scale oil and gas projects have boosted the PNG economy, and many businesses are preparing for the same effect with Papua LNG. For example, equipment supplier Bishop Brothers is positioning itself to be a major supplier to the Papua LNG project, according to General Manager Len Pianta. ‘We are looking to the future in providing potential site stores in Gulf Province to better service the project.’
