LNG News Editor:
Papua LNG, the joint venture expansion project in Papua New Guinea involving France’s TotalEnergies, US major ExxonMobil and Australia’s Santos, has launched a full front-end engineering and design (FEED) process to expand the existing PNG LNG plant’s production by up to 6 million tonnes per annum.
After initial engineering studies, the Papua LNG partners have selected a concept using four electric-powered LNG Trains with a combined capacity of 4 MTPA to be developed within the existing PNG LNG plant operated by ExxonMobil and currently producing more than 9 MTPA.
The Papua LNG venture has also secured access to up to 2 MTPA of existing liquefaction capacity from PNG LNG and first production from the expansion is expected by the end of 2027 or early 2028.
TotalEnergies holds a 40.1 percent stake in Papua LNG, ExxonMobil owns 37.1 percent and Adelaide-based Santos has a 22.8 per cent interest.
The State of Papua New Guinea may exercise its rights for up to a 22.5 percent interest at the final investment decision, which is planned by the end of 2023 or early 2024.
Should the State of PNG exercise its full back-in right, the stake of Santos for example would be reduced to 17.7 percent as would those of the other shareholders on a pro-rata basis.
“Integrating the Papua LNG midstream development within PNG LNG maximises the value of both projects and delivers increased capital efficiency by reducing upfront capital expenditure and maximising integration synergies,” said a statement.
“PNG LNG will receive an access fee, pro-rata sharing of operational expenses and ongoing process tolling revenue that compensates PNG LNG for making the capacity available,” it added.
The Papua joint venture is also seeking a cleaner LNG stamp by using electric power as well as the re-injection of carbon-dioxide into a CO2 storage reservoir.
“The concept selected for Papua LNG maximises value through midstream integration with PNG LNG to deliver increased capital efficiency and lower operating costs, consistent with our disciplined operating model,” explained Santos Chief Executive Kevin Gallagher.
“FEED entry for Papua LNG is a significant step for the project and we are working closely with our partners, the PNG government, communities and local companies to deliver new jobs and help support the local economy,” stated Gallagher.
The Papua LNG partners said that the selected concept was expected to have a lower capital expenditure outcome than the previous concept.
“Costs will be refined during the FEED phase and the project participants intend to explore project finance opportunities for a portion of the project cost,” they added.
Santos also has a 42.5 percent interest in PNG LNG after its acquisition of Oil Search and is now the largest shareholder in the plant.