Papua New Guinea government, partners sign LNG agreement

Total SA along with joint venture partners ExxonMobil Corp. and Oil Search Ltd. have signed a gas agreement with the government of Papua New Guinea that defines the fiscal framework for the Papua LNG project (Elk-Antelope field development) in the country’s Eastern Highlands. This follows the memorandum of understanding signed by the parties for development of the Elk-Antelope fields in mid-November 2018.

The new agreement includes:

• A domestic market obligation that will provide gas for sustainable future domestic usage.

• A deferred payment mechanism for the state’s payment of past costs, thus easing the financial burden associated with the state’s acquisition of its equity interest in the project.

• National content to support local workforce development, involvement of local businesses and socioeconomic development of the communities impacted by the project.

Peter Botten, Oil Search managing director, said the agreement’s signing will enable all Papua LNG project partners to proceed into front-end engineering and design-related activities. These will begin with selection of contractors and engineering subcontractors.

Botten said the PRL 15 (Elk-Antelope) venture, operated by Total, has reached alignment on a number of agreements that will support the Papua LNG project in taking the next step towards development. This includes those related to the ExxonMobil-operated project site at Caution Bay near Port Moresby and facility access.

Botten added that Oil Search’s focus will now move to working with ExxonMobil, operator of the PRL 3 (P’nyang field) and the commencement of the FEED phase for the proposed three-train integrated development at the PNG LNG plant site.

Botten noted that this will also include FEED for the Associated Gas Expansion Project operated by Oil Search.

The plan involves the construction of three 2.7 million tonnes/year LNG trains on the existing PNG-LNG plant site at Caution Bay just west of Port Moresby.

Two trains will be supplied with gas from the Elk-Antelope fields and the third train by gas from existing PNG-LNG fields and the yet-to-be developed P’nyang field in the Western Highlands. Together Elk-Antelope and P’nyang contain an estimated 11 tcf of undeveloped 2C gas resource.

The Papua LNG project is based on the Elk-Antelope resources in petroleum retention license PRL15 in the Eastern Highlands. Total has 31.1% interest, ExxonMobil has 28.3% interest acquired when it bought InterOil earlier this year, and Oil Search has 17.7%. These percentages are after the state of Papua New Guinea has backed into the project for 22.5%.

FEED is expected to lead to a final investment decision in 2020 enabling start of production from the three LNG trains in 2024.