PNG LNG project has continued performing well. This, according to Oil Search’s third-quarter report, following the production at record levels of 8.8 MTPA on average for the first nine months of the year.
Oil Search managing director Keiran Wulff said this project included 6.55 mmboe from the PNG LNG Project, which came out with an annualised rate of 8.9 MTPA during the quarter, adding that the good performance can also be attributed to the cost reduction and operational excellence programs in PNG.
He added that the work is done on a third party spend to make sure that costs are sustainable with a direct focus on continuous performance and improvement.
“Despite improved oil prices during the quarter, the impact of the two-to-three month lag on LNG contract pricing and a higher portion of LNG spot sales has resulted in a 29 per cent fall in revenue. The company’s liquidity position remained robust, with $US1.65 billion of cash and undrawn bank credit lines available at 30 September,” he said. “Oil prices have since recovered from lows within the $US20/bbl range in the second quarter to above US$40 in the third quarter, which will rebase the LNG contract prices going forward. In addition, North Asian LNG spot prices have recovered materially from the lows of below $US2.00/mmBtu to above $US6.00/mmBtu currently, with demand improving as the northern hemisphere enters the winter period.”
He added that the progress has also continued on the value and capital optimisation studies for the Pikka Unit Development - redesigned as a phased development - with the help of the Alaska team and other key stakeholders.
“This will deliver increased capital efficiency, a materially lower upfront capital commitment and a significant reduction in the project breakeven cost of supply,” he said. “These changes will make the project resilient at lower oil prices and easier to finance while ensuring the project can be expanded efficiently without compromising full value. A primary focus during the third quarter has centred around finalising the longer-term strategy for our business, taking into consideration the global economic and investment conditions and trends, as well as ensuring the company is resilient to lower oil prices and well-positioned to optimally take advantage of its world-class assets and deliver full value when conditions allow.”
