Papua New Guinea has moved a step closer to finalizing a preliminary agreement for a second LNG project with Total and Exxon, Reuters reports, quoting the Petroleum Minister of the country.
The official said the Papuan government was behind the project “in principle” although some terms of the final agreement had yet to be negotiated.
Last month, Reuters again quoted the minister, Kerenga Kua, as saying the terms of the agreement might need to be renegotiated to accommodate the Papuan government’s concerns regarding the project.
“Any signatory to a contract can, anytime after an agreement has been signed, go back to the negotiating table if they are, as an afterthought, unsatisfied with certain aspects of the terms and conditions of the contract,” Kua said. “Our approach is purely commercial in nature,” Kua said in late July.
The Papua LNG project will be essentially an expansion on the already operating PNG LNG project, which is run by Exxon, Total, and Australia’s Oil Search. News of the plan to increase PNG LNG’s capacity by adding more liquefaction trains in a new project first broke last year.
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The expansion, estimated to cost some US$13 billion, will bring the export capacity of PNG LNG up to 16 million tons of gas per year and will involve the construction of three more trains to source gas from the Total-operated Elk-Antelope field and from the P’nyang field, operated by Exxon. The aim is to have the additional capacity in place by 2023 or 2024, when demand for LNG in Asia is expected to hit new highs amid a slowdown in new production capacity additions.
The PNG LNG project cost US$19 billion and had a nameplate annual capacity of 6.9 million tons of liquefied natural gas. Yet in 2017, the project yielded as much as 8.3 million tons of LNG, according to a Reuters investigation released at the beginning of this year. Since 2014, when production began, Exxon has raked in some US$18.8 billion in revenues, also according to Reuters since the company does not release figures for PNG LNG.
A few months later, the political crisis caused by disgruntlement among certain groups about the distribution of LNG wealth came to a head and the Prime Minister who had signed the preliminary deal for Papua LNG was ousted at a vote in May.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.