PNG LNG partners focus on advancing gas projects

SYDNEY (Reuters)—Australia's Oil Search Ltd. expects its partners to agree by year-end on how to coordinate development of their Papua New Guinea gas projects.

Oil Search is a partner in the PNG LNG project and P'nyang field, operated by ExxonMobil Corp., as well as a partner in the undeveloped Elk-Antelope gas assets operated by France's Total.

The two projects are in talks over how best to develop their gas fields without spending billions of dollars duplicating infrastructure, by underpinning the addition of two units at the PNG LNG plant, potentially doubling its output by the mid-2020s.

The PNG LNG project would include upstream installations, more than 700 km of pipeline, a gas conditioning plant and an LNG terminal, among other facilities.

 

 

Chief Executive Peter Botten said the two majors see the country as one of their best growth options and are on track to resolve technical, cost-sharing, and marketing issues by the end of this year.

But he warned that the key hurdle to their plans was getting the PNG government to complete the process of identifying which landowners in the impoverished highlands are eligible for royalties from PNG LNG.

The clan vetting process was supposed to have been completed before LNG exports began in 2014. The slow distribution of benefits has led to violent clashes over the past few years, which the partners fear could potentially disrupt operations.

Oil Search had hoped the gas partners could reach a final investment decision on their projects by the end of 2018, but analysts see that being made in 2019 at the earliest.

(Writing by Sonali Paul; reporting by Christina Martin in Bengaluru; editing by Richard Pullin)

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