LNG

Oil Search, the Papua New Guinea liquefied natural gas and oil player, posted impressive third-quarter results making the US$6.25-billion merger with Australian LNG plant operator Santos even more enticing as PNG LNG expansion plans also advanced.

Feb 12 (LNGJ) - French major Total, operator of the Papua LNG feed-gas assets, and joint venture partners ExxonMobil and Australia-listed Oil Search have signed a Fiscal Stability Agreement with Papua New Guinea. “The Fiscal Stability Agreement is the final step envisioned under the Papua LNG Gas Agreement to guarantee Papua LNG fiscal stability,” said Oil Search. It follows the amendments to Acts passed by the PNG Parliament in November 2020.

   “We are pleased to see further progress achieved on Papua LNG,” said Keiran Wulff, Oil Search's Managing Director in regard to the PNG LNG expansion project to more than double current output. “It also demonstrates increasing alignment between the PNG Government and the joint venture partners. We look forward to progressing Papua LNG and announcing further milestones consistent with our Strategic Review,” added Wulff.

Oil Search, the Papua New Guinea-focused oil and gas company listed in Australia, said its overall production increased by 5 percent, supported by a continued strong performance from the PNG LNG plant as talks continued on building three new processing Trains.

The LNG plant, located northwest of the capital Port Moresby, produced at an annualised rate of 8.7 million tonnes per annum in the first three months of 2020.

Total revenue from Oil Search’s overall operations from PNG to Alaska dropped 20 percent to US$395.4 million from US$446.7 in the previous quarter, impacted by a 13 percent fall in sales due to timing of shipments and the oil price drop.

Oil Search, headquartered in PNG and listed on the Australian Securities Exchange, said it was well placed to withstand a prolonged period of oil price weakness and advance its growth projects when market conditions improve.

The company noted that formal negotiations had been suspended in January on the LNG expansion between ExxonMobil, on behalf of the P'nyang co-venturers, of which it is part, and the PNG Government.

“Discussions have resumed with the State, aimed at reaching an agreement that is fair and balanced for all stakeholders,” said Oil Search.

“This agreement is required before the LNG expansion project can move into the front-end engineering and design phase,” it explained.

“Oil Search remains committed to progressing the three-Train integrated expansion project, a highly cost-effective development, at the appropriate time,” stated Oil Search.

The two existing LNG Trains at the plant northwest of Port Moresby have a nameplate capacity of 6.9 MTPA, though have consistently produced more and will be the site of any future expansion.

Three new liquefaction Trains are proposed in the delayed plan. The five Trains when operational would have capacity of nearly 20 MTPA and would give PNG a more substantial role as a regional producer.

The P’nyang gas field licence, controlled by PNG LNG plant operator ExxonMobil, also includes Australian-listed Santos as well as Oil Search.

The separate Papua Gas Agreement for other feed-gas resources has already been approved and signed.This comprises holders of the onshore PNG Elk-Antelope gas field licence, led by Total and also including shareholders in the P’nyang field lease, ExxonMobil as well as Oil Search.

Elk-Antelope onshore gas fields are covered by petroleum retention licence PRL15 and by the Papua Gas Agreement and the P’nyang onshore gas fields are in the PRL3 licence area of PNG.

“The first quarter of 2020 has been one of the most volatile periods in history for Oil Search and the global oil and gas industry in general,” said new Managing Director Keiran Wulff, who succeed Peter Botten.

“The company has taken swift steps to ensure that we are in the strongest position possible to weather a potentially protracted period of global disruption,” he added.

In its North American operations oil discovered at the Mitquq and Stirrup fields in Alaska, with flow rates above expectations