ExxonMobil shuts LNG plant in Papua New Guinea after earthquake

MELBOURNE,  (Reuters) -The 7.5 magnitude quake that rocked the region early on Monday damaged mining and power infrastructure and led ExxonMobil Corp to shut its $19 billion liquefied natural gas (LNG) plant, the country's biggest export earner.

ExxonMobil said communications with nearby communities remained down, hampering efforts to assess damage to its facilities that feed the PNG LNG plant.

"Communications continue to be one of the most significant challenges," the company said in an emailed statement.

Exxon Mobil PNG LNG

Its partner, Oil Search Ltd, said a review of all of its facilities and infrastructure would take at least a week, and an industry source told Reuters that the Exxon plant will likely be shut at least seven days.

LNG SHUTDOWN

The PNG LNG project is considered one of the world's best-performing LNG operations, having started exports in 2014 ahead of schedule, despite the challenge of drilling for gas and building a plant and pipeline in the remote jungle of PNG.

The liquefaction plant has also been producing at around 20 percent above its rated capacity of 6.9 million tonnes a year.

ExxonMobil said it shut the two LNG processing units, or trains, at its site on the coast near Port Moresby after earlier shutting its Hides gas conditioning plant and Hides production pads in Hela province in the highlands region.

Gas is processed at Hides and transported along a 700 km (435 miles) line that feeds the PNG LNG plant, whose main customers are in Japan, China and Taiwan.

Traders said the impact on the LNG market would depend on the duration of the shutdown, but noted that spot prices <LNG-AS> have recently fallen from more than $10 per million British thermal units (mmBtu) as North Asia is coming out of the period of heavy winter gas demand.

"The global LNG market is likely to respond immediately as the buyers need to seek alternative sources," said Boseok Jin, a research analyst at HIS Markit.

INFRASTRUCTURE DAMAGE

Barrick said some activities at the Porgera gold mine have been suspended to save electricity as the power station that supplies the mine had been damaged.

The mine is co-owned by Barrick and China's Zijin Mining.

State-owned Ok Tedi said by email that a landslip had blocked a road and damaged pipelines to its copper and gold mine in the Star Mountains, adding that the road would take up to two days to be cleared.

Earthquakes are common in Papua New Guinea, which sits on the Pacific's "Ring of Fire", a hotspot for seismic activity due to friction between tectonic plates. Part of PNG's northern coast was devastated in 1998 by a tsunami, generated by a 7.0 quake, which killed about 2,200 people.

(Reporting by Melanie Burton and Sonali Paul; Additional reporting by Tom Westbrook in SYDNEY, Charlotte Greenfield in WELLINGTON, Jessica Jaganathan and Oleg Vukmanovic in SINGAPORE, and Osamu Tsukimori in TOKYO; Editing by Richard Pullin, Tom Hogue, William Maclean)

 

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