Papua New Guinea LNG stakeholder Oil Search posted lower first-quarter revenues as it remained focused on pushing forward the construction and expansion plans for three additional liquefaction Trains in the Oceania nation involving separate joint ventures.
The Australian-listed company with oil and gas interests in PNG and to a lesser extent Alaska said total revenue for the quarter was US$398.1 million.
Oil Search said this represented a drop of 21 percent below the fourth quarter of 2018, primarily due to the timing of LNG shipments, with three LNG cargos worth more than US$35M in revenue net to Oil Search, on the water at the end of the period compared with one cargo at the end of the previous quarter.
However, the operating revenue for the three months was still higher than the US$295M reported in the same quarter a year ago.
The company said the quarter was also marked by progress on the PNG LNG expansion as the government and its energy company partners, including LNG plant operator ExxonMobil, signed a formal Gas Agreement defining the fiscal framework for the Papua expansion project.
The PNG LNG plant, located northwest of Port Moresby, already produces more than 8 million tonnes per annum of LNG and studies have supported new LNG capacity comprising three Trains each with 2.7 MTPA of output and the upstream development of the Elk-Antelope field to provide feed-gas.
The other signatory to the agreement with the government was French major Total, the main shareholder in the Petroleum Retention Licence 15 that will underpin most of the production increase at the plant.
The agreement gives the PNG Government and landowners 22.5 percent of the project with Total holding 31.1 percent, ExxonMobil 28.7 percent and Oil Search 17.7 percent.
“Following the completion of the Papua LNG Gas Agreement, focus has now turned to finalizing the P’nyang Gas Agreement, with a targeted signing in the second quarter of 2019,” said Oil Search Managing Director Peter Botten.
“Substantial progress has also been made on other commercial agreements supporting the proposed three-train, 8 MTPA downstream development at the PNG LNG plant site,” he added.
“The Papua LNG, PNG LNG and P’nyang joint ventures are targeting a final investment decision in 2020, which would place the proposed three-Train development on track to commence deliveries of LNG in 2024,” stated Botten.
Oil Search said that all PNG LNG stakeholders were committed to meeting the global market window when significant new LNG supply is required to meet demand growth and requirements for replacement of expiring contracts.
“Oil Search’s dedicated LNG equity marketing team continues to report strong buyer appetite for LNG from the proposed new Trains, underpinned by the reliability of our operators, the proximity of PNG to North Asian markets and the high heating value and quality of LNG from PNG,” said Botten.
“Many buyers are seeking both geographic and seller diversification, which are highly favourable drivers in support of new equity LNG sellers such as Oil Search,” he added.
The company said its total quarterly production was 7.25 million barrels of oil equivalent, reflecting a continued strong performance by the PNG LNG plant, offset by lower oil field production.
The PNG LNG plant produced at an annualized rate of 8.8 MTPA during the quarter, 28 percent above nameplate capacity.
