LNG

AGL Energy, the Australian utility whose plans for an LNG import terminal in the state of Victoria were thwarted by regulators, has rejected an unsolicited joint bid of over US$3.5 billion from Brookfield Asset Management of Canada and one of Australia’s wealthiest individuals.

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

Oil Search, the Papua New Guinea-focused oil and gas company listed in Australia, reported an 8 percent drop in net profits because of lower prices as Managing Director Peter Botten handed over to his successor while expressing hope that the delay in the PNG LNG expansion project was only temporary.

The Papua New Guinea LNG export plant has achieved record production as talks continued in January on the expansion project to reach an “equitable” solution for both the government and the energy companies.

Papua New Guinea said it was preparing to start talks with ExxonMobil Corp. and partners in one of two feed-gas projects to negotiate better terms for the government and its holdings in the development of the PNG LNG expansion.

Oil Search, the Papua New Guinea energy company, said the PNG liquefied natural gas plant again posted high quarterly production, though suffered output disruption because of damage to the loading facility amid optimism for a final agreement before the end of 2019 on the LNG expansion project.

Oil Search Managing Director Peter Botten, one of the leading figures in Papua New Guinea oil and gas development over the past 26 years and who had a key role in the nation’s emergence as an LNG exporter, has decided to hand over the company helm to a successor.

Papua New Guinea said it would honour a natural gas agreement with French energy major Total signed with a previous government for the Oceania nation's liquefied natural gas expansion projects after securing some concessions and is now likely to proceed with finalizing a second feed-gas accord.

The decision removes uncertainty over the plan that arose after new Prime Minister James Marape came to power in May 2019 promising to win more benefits from the international oil and gas companies backing the expansion.

The Papua LNG gas agreement is one of two accords needed for Total and its partners, including Exxon Mobil Corp. and Australian-listed Oil Search Ltd and others, to go ahead with the expansion proposals.

“The government has now cleared Total to proceed full steam ahead with the implementation of the Papua Gas Project,” said Petroleum Minister Kerenga Kua in a statement.

Peter Botten, the Managing Director of Oil Search whose headquarters are in PNG, said he was happy with the outcome despite the project delays.

“We are pleased that the PNG Cabinet (National Executive Council), has completed its review of the Papua LNG Gas Agreement and has validated the agreement as executed on 9 April 2019,” stated Botten.

“The next step for the proposed integrated three LNG Train development is the finalization of the P’nyang Gas Agreement,” he added.

Botten explained that once this final step is completed the Petroleum Retention License 15 in the Gulf Province of PNG and the PRL 3 licence in the Western highlands, as well as the overall LNG joint ventures, can proceed into the front-end engineering and design phase of these “nationally important” developments.

Doubts about the gas deal escalated in August when the government suddenly called for talks to revise the agreement.

The minister Kua said Total had made some concessions, promising to prepare a detailed plan outlining how much local equipment and services would be used in the project and to negotiate with any third parties wanting access to the project’s gas pipelines.

Total would also be willing to negotiate for PNG to take a stake in the pipelines after the state has repaid all its loans and costs on the LNG project, and would consider buying LNG carriers in a joint venture with the state.

“Most of these are substantial new concessions on potential future benefits,” state Minister Kua.

The two existing LNG Trains at the plant northwest of Port Moresby have a nominal capacity of 6.9 million tonnes per annum but are actually running close to 9 MTPA.

Three other Trains are planned in the expansion and the five Trains when operational would have an actual capacity of nearly 20 MTPA.

Analysts said the expansion when completed would put PNG into the premier league of global LNG suppliers.

Oil Search, the Papua New Guinea-based energy company with liquefied natural gas stakes in the Oceania nation, is moving forwards with its investments in the US state of Alaska.

Oil Search, the Australian-based oil and gas producer based in the Papua New Guinea capital Port Moresby, said it was confident about the future of PNG LNG and its expansion project as the nation recovers from a political crisis.