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Published On:February 20, 2018
Posted by Staff Report

China’s gas demand to spur new investments in PNG

BY DAMON EVANS/ CONTRIBUTING AUTHOR

The Asian Review has reported that strong growth in gas demand from China is set to trigger a new round of major investment in Papua New Guinea, which urgently needs a financial boost.

ExxonMobil of the U.S. and Total of France, two oil supermajors, along with Oil Search of Australia, are likely to give the go-ahead by next year for more than $6 billion-worth of additional liquefied natural gas export capacity in the resource-rich South Pacific nation.

That investment would come after China surpassed South Korea in 2017 to become the world’s second-largest importer of the fuel behind Japan. Analysts expect the greater-than-expected gas demand growth to expand global LNG production, bolstering prospects for cash-strapped but gas-rich Papua New Guinea.

Total, on behalf of partners ExxonMobil and Oil Search, controls the undeveloped Elk-Antelope gas fields project in Papua New Guinea’s southern Gulf Province, which will fuel the country’s export expansion. It is expected that Elk-Antelope, instead of being a standalone export facility, will be integrated with the existing ExxonMobil-operated export plant, a development known as PNG LNG, as part of a cooperative approach to save costs, said Chris Meredith, a senior upstream analyst at Wood Mackenzie.

The U.K.-based energy research company estimates that capital spending to develop the Elk-Antelope fields will be $6.1 billion, which would cover the upstream development of gas and additional production capacity at PNG LNG to process it.

ExxonMobil, Total and Oil Search will soon present their preferred development option to the Papua New Guinea government, with a final investment approval planned in 2019, Oil Search Chief Executive Peter Botten told investors on Jan. 23. Botten said talks were continuing with Total and ExxonMobil on core project financing and marketing arrangements for the gas.

Elsewhere in Papua New Guinea, ExxonMobil, along with its joint venture partners, Oil Search and Japan’s JXTG Holdings, has found more gas at its P’nyang field in the Highlands, a mountain range that runs through the country, which could be used to underpin an additional expansion of ExxonMobil’s 6.9 million tons per year PNG LNG export plant that already has two processing trains to liquefy gas.

ExxonMobil and Oil Search hope to add at least one additional production train at PNG LNG using gas from the P’nyang field. Analysts estimate capital spending for this expansion, which might not receive final approval until 2021, at $2 billion to $2.5 billion.

Along with an increase in reserves at the Hides field, in Papua New Guinea’s Southern Highlands Province and which supplies the country’s sole export plant, and ExxonMobil’s recent Muruk discovery, northwest of the Hides field, the latest find at P’nyang adds to the company’s rapidly growing inventory of low cost-of-supply natural gas in Papua New Guinea.

Papua New Guinea’s total proven gas reserves stood at 7.4 trillion cubic feet at the end of 2016, far less than Australia’s 122.6 trillion cubic feet. But some analysts estimate that Papua New Guinea’s gas resources are enough to support expansion of export capacity from 6.9 million tons per year now to as much as 20 million tons per year within the next decade, although much more appraisal drilling needs to be done. Post Courier

....read more on >> Pacific Mining Watch

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