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Earthquake Disrupts Oil & Gas Operations In Papua

An earthquake of a 7.5 magnitude led to the suspension of oil and gas operations in Papua New Guinea yesterday. The epicenter of the quake was in a remote area and no casualties have been reported yet, the country’s National Disaster Center told Reuters.

Communication channels with the affected area are completely down, an official said, making it difficult to assess the damage. Exxon, which operates the PNG LNG plant together with French Total, said it had closed it down to assess the damage. The plant is in close proximity to the quake’s epicenter. The company added that all the personnel on site have been accounted for, safe and sound.

Recently, Exxon’s and Total’s partner in the LNG venture, Oil Search, said the companies had agreed to double the capacity of the PNG LNG project to 16 million tons annually. This, Oil Search noted, would put PNG LNG on par with Australia’s biggest LNG projects, turning Papua New Guinea into an important player on the global LNG market that is forecast to continue growing as the world shifts from coal and oil to gas.

There has been a veritable race to build LNG capacity in response to rapid growth in demand, and forecasts that this demand growth will persist. In its first LNG Outlook last year, Shell projected the growth rate at 4-5 percent for the period between 2015 and 2030. The volume of LNG trade, Shell said then, will jump by 50 percent between 2014 and 2020.

Papua New Guinea had proven reserves of 7.4 trillion cu ft of natural gas as of the end of 2016. This compares with 122.6 trillion cu ft for Australia—but still, according to analysts, Papua could build an LNG production capacity of up to 20 million tons annually over the next ten years.

By Irina Slav for Oilprice.com

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