In its third quarterly report, Oil Search Ltd said that conversations between the P’nyang operator ExxonMobil and the PNG government are still continuing. This is to secure balanced and fair fiscal terms on the P’nyang Gas Agreement.
According to KUMUL Petroleum Holdings Ltd (KPHL) managing director Wapu Sonk, if discussions go well, they should be able to meet the LNG demand window from 2026 to 2028. He also said that the LNG spot prices had recovered a bit from US$2.4/MMbtu (million (106) British thermal units) a few months back to around US$4.50/MMbtu now.
The review conducted by Oil Search stated that because of the harmful effects of COVID-19, the supply gap for 2020 have been deferred by a few years,
“The LNG projects have been delayed already due to low demand caused by the Covid-19,” Sink said. “If the PNG projects (Papua LNG and P’nyang) enter front end engineering design (Feed) in 2021, final investment decision in 2022 and start constructions in 2023, we should be able to meet the demand gap or window from 2026 to 2028. The demand window could move forward as well if current projects in operations don’t do well or project under constructions now get delayed. Papua LNG Project, which has a signed gas agreement, needs to enter Feed early next year if we have to meet the LNG demand window. The P’nyang project can come behind that as it does not have a gas agreement yet, hence decoupling the Papua LNG from P’nyang or PNG LNG Project expansion train is key to getting Papua LNG going as soon as possible.”
The country’s national oil and gas company, the KPHL is responsible for managing the State’s 16.57 per cent equity in the ExxonMobil operated US$19 billion (K64.91 billion) PNG LNG project. This has become the third largest partner in the largest single investment made by the country as of today.
