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ExxonMobil, France’s Total, and Australia’s Oil Search have signed a gas agreement with Papua New Guinea, outlining the fiscal terms for a new liquefied natural gas (LNG) project in the Pacific island, estimated to cost US$13 billion and thought to double Papua New Guinea’s LNG exports from the Exxon-operated PNG LNG plant.
The gas agreement for Papua LNG allows the three partners to begin the Front-End Engineering Design (FEED) phase of study that will lead to the final investment decision (FID) on the project in 2020, Total said in a statement on Tuesday.
The project of 5.4 million tons per annum (Mtpa) capacity will consist of two LNG trains of 2.7 Mtpa capacity each. Total will operate the gas production, while the LNG plant will be developed in synergy with Exxon-operated PNG LNG project through an expansion of the existing plant in Caution Bay, the French company said.
“We are very pleased with the progress of this competitive LNG project that benefits from the brownfield synergies with existing liquefaction facilities and the proximity to Asian markets,” Total’s chairman and CEO Patrick Pouyanné said.
“It will further strengthen our position in the Pacific basin and ensure our future LNG portfolio growth,” he noted.
According to Peter Botten, Oil Search’s Managing Director:
“FEED is expected to result in a Final Investment Decision in 2020, which will ensure that first production from our new, globally competitive, LNG trains is available in 2024.”
If Papua LNG makes it through the final investment decision next year, it will add to supply of the super-chilled fuel in the middle of next decade, when LNG demand is expected to have continued to rise.
In 2019, at a time in which LNG spot prices in Asia are down compared to the previous two years, the global LNG market could be set for a record year of project sanctions, according to Wood Mackenzie’s estimates from January this year.
“Frontrunners in the race to hit FID include the US$27 billion Arctic LNG-2 in Russia, at least one project in Mozambique and three in the US,” WoodMac says.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.