Papua LNG Project Restarts Ahead Of Schedule

Exxon's Papua New Guinea LNG project has resumed operation two weeks ahead of schedule, the supermajor's partner in the project, Australian Oil Search, said. The restart is partial, however, with just the first train of the facility in operation. The second train will restart later as more gas begins to flow from the Hides field and several associated gas fields.

An earthquake of a 7.5 magnitude led to the suspension of oil and gas operations in Papua New Guinea at the end of February. The epicenter, although in a remote area, was close to the PNG LNG project, and all operations were suspended as a result of the disaster. The project operator, Exxon, says it hopes operations will resume in full by the end of April.

The PNG LNG project is the biggest source of state revenue for Papua New Guinea. Earlier this year, Exxon and partner Total announced plans to double the project's capacity to 16 million tons of LNG annually, which would put the Papua project on par with some of the largest LNG projects in Australia.

The expansion will cost US$13 billion, and the additional capacity should come online in 2023 or 2024 when demand for LNG in Asia is expected to hit new highs amid a slowdown in new production capacity additions.

The cost of the extension might seem pretty hefty, but it is much below the US$19.5-billion price tag on the initial liquefaction plant and export terminal.

Meanwhile, Oil Search earlier this week reported it had upgraded the reserves held in one of the fields feeding the PNG LNG terminal. The company now estimates that the P'nyang field holds 2 trillion cu ft of gas-that's 84 percent more than the previous estimate. This means that there is 11 trillion cu ft of gas already available for the expansion of the project.

By Irina Slav for Oilprice.com

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