Exxon to add third train to PNG LNG Project

Exxon Mobil Corp., as operator of the PNG LNG Project and of PRL 3, has signed a Memorandum of Understanding (MoU) with the PNG government with respect to the expansion of the PNG LNG Project.
 
Under the MoU, the PNG LNG Project will supply electricity and gas for domestic power generation, providing a reliable and clean source of energy to support PNG’s urgent power needs.

The agreement details the provisions for an LNG expansion project, including the award of a petroleum development license (PDL) and associated pipeline licenses for P’nyang gas field in PRL 3 (Oil Search, 38.51%).

P’nyang will provide additional long-term gas reserves for power generation and Project expansion, including expected debottlenecking of the existing trains and a third LNG train.
 
The MoU sets out an agreed timeline between the PRL 3 co-venturers and government to a final investment decision for an additional LNG train. The commitment from the PRL 3 owners is for the sanction of the third train in the earliest timeframe, subject to completion of typical activities including appraisal, marketing, financing and development engineering on P’nyang.

Under the agreement, a final investment decision is to be taken by the end of 2017 at the latest.

The PRL 3 licensees are in the process of finalizing the PDL application for P’nyang which, under the MoU timeline, is expected to be offered by the end of the first quarter of 2015.

Preparations are underway for appraisal drilling and development engineering studies, which will commence this year.

Oil Search is currently updating its resource estimate for P’nyang. Preliminary interpretation of recently acquired data has indicated a larger resource base than currently booked, which is providing confidence that the field can underpin the expansion train.

The commitment under the MoU to near-term appraisal drilling will be undertaken to better quantify 1C contingent resource volumes.

Oil Search’s Managing Director, Peter Botten said, “We are delighted that Exxon Mobil, as operator of the PNG LNG Project and PRL 3, has signed this MoU. This agreement meets the needs of all stakeholders. It will deliver much needed power to the people of PNG and provides an agreed timeline and activities for an expansion train at PNG LNG supported by P'nyang, a major gas field which is a key growth asset in Oil Search's portfolio.”

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