Papua New Guinea’s (PNG) oil and gas developer, Oil Search, has warned of a two-year delay in a $20 bill LNG expansion plan in the country.
It also said in its first half 2020 results presentation that there will be slower development of its Alaska oil project.
"The world is a very different place today than it was six months ago," said CEO, Keiran Wulff, but confirmed that Oil Search was confident that the expansion would proceed given its robust economics.
Oil Search reported a loss of $266.2 mill for the first half of this year, which was caused by large asset writedowns, resulting in the oil and gas producer scrapping its dividend, on the back of the need to preserve capital.
Excluding one-off items, net profit fell by 85% to $24.7 mill, due to lower oil prices and higher exploration expenses.
Oil Search’s LNG expansion plan in PNG, led by partners ExxonMobil and Total, had already stopped, due to a breakdown in talks with the government on the project’s fiscal and other terms.
Dr Wulff said that he was confident that all parties would be able to agree terms that would allow the project to proceed, given broad acceptance of the difficulties of moving ahead with a multi-billion-dollar project in the changed climate post COVID-19.
He said that no change in the three-train project was envisaged but could not be be ruled out, as the partners sought the most economic investment.
Included in the huge loss was an impairment charge of $374.2 mill before tax, mostly taken on the value of PNG’s exploration ventures.
The company also said that it was carrying out a strategic review in light of the changed markets, with the results to be reported to investors in the December quarterly report.
