PNG seeks to renegotiate Papua LNG

The PNG Minister for Petroleum issues the below release on re-opening the Papua LNG terms for negotiation.


PRESS RELEASE


STATE TEAM HEADING OUT TO RE-NEGOTIATE WITH TOTAL


The National Executive Council has authorized a State Negotiating Team (SNT) lead by the Minister for Petroleum, Kerenga Kua, to head off to Singapore to seek to re-negotiate the terms of the Papua LNG Gas Agreement previously signed on 19 April 2019. The SNT left today 15 August for Singapore.


The Papua Gas Agreement was signed by the previous O'Neill led Government inside the period when serious moves were afoot to remove and replace that Government.
The Marape led Government on taking office on 30 May 2019, took the firm view that the Papua Gas Agreement was disadvantageous to the State and the people in certain respects and resolved to seek a renegotiation.


Mr Kua cautions that considering what's at stake, the peoples expectations must be guarded during this period. The negotiations could work out well or even disastrously, but either way, the people must be ready to accept whatever the outcome. As a Nation we have reserved all our rights in law as we move down this path.


Success in the discussions could lead to an early progress of the project. By the same token failure could have very serious ramifications. But failure must not be ruled out and must remain within our contemplation. This is a risk we take as we try to move in the direction of taking PNG back and making it wealthy. The final outcomes will be briefed to the Prime Minister James Marape and the National Executive Council, and the final decision will be taken by the National Executive Council.


Considering our Nations economic circumstances short and long term, no stone must be left unturned at such important junctures. Mr Kua said, it would be futile and worthless to say in the future we should have done this deal differently. That question must be asked and answered now. This is the only diligent approach given how we find ourselves in this spot. The SNT expects to return early next week and report back to the National Executive Council. But Mr Kua says the Prime Minister will be kept informed daily as the negotiations progressed.

Read More

Papua New Guinea LNG force majeure a week after expansion plans announced

ExxonMobil has declared force majeure on PNG LNG after Papua New Guinea was hit by a 7.5 magnitude earthquake on Monday. The partners in the plant, which exported 7.8 million tonnes last year, are ExxonMobil (33.2% operator), Oil Search (29%), State of Papua New Guinea (16.8%), Santos (13.5%), JX Nippon (4.7%) and Mineral Resources Development Company of Papua New Guinea (2.8%). Latest reports are that the pipeline and liquefaction plant sustained minimal damage, but could potentially be another six weeks before it can be restarted.

This comes a week after the announcement by the upstream partners in Papua New Guinea’s giant gas resources to more than double the country’s liquefaction capacity to 16mmtpa at a cost of USD13 billion. The partners are planning to help add a further three trains in the country – one to support growth at ExxonMobil’s P’nyang field, and two to service new gas from Total’s Elk-Antelope development. FEED is planned to start later this year, but will require agreement of terms with the PNG government first including domestic supply obligations.

Given this is a brownfield expansion, it is significantly cheaper than the original USD19.5 billion construction cost of the project. The partners were previously toying with the idea of having a separate facility for Elk-Antelope gas as Total and ExxonMobil could not reach agreement. ExxonMobil was pushing for the gas to go through PNG LNG supported by train expansions, while Total was considering a new plant (Papua LNG). While the details on the new three trains remain high level and could still see a separate Papua LNG project, this agreement thaws the development discussions which have been frozen for more than a year. The separate trains supporting the different upstream gas sources will also be conducive to structuring and financing of the proposed project – avoiding the complexity involved with unitisations and co-mingled gas marketing. The new LNG could come onstream by the early 2020s and would arrive in time for an emerging LNG supply gap that is foreseen by the industry.

Read More