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Russia’s Gazprom said to freeze Sakhalin LNG expansion plans
ASIA
RUSSIAN natural gas giant Gazprom is freezing the development of Sakhalin LNG project owing to the lack of the necessary gas resource base, Reuters said on November 1 citing unnamed sources close to the company.
The company operates its only one LNG plant in Sakhalin and is facing delays in the planned Baltic LNG project after the recent pull-out by Royal Dutch Shell. Reportedly, Russia’s first LNG plant in Sakhalin, with 10mn tonnes per year (tpy) of capacity, has to freeze the third stage of the project, which had previously been planned to deliver another 5mn tpy by 2021.
The project is a joint venture also involving Royal Dutch Shell and Japanese firms Mitsui and Mitsubishi.
The problem is the resource base required for the expansion. One of the options was
purchasing the gas from another Sakhalin pro- ject, Sakhalin-1, operated by state oil major Rosneft and ExxonMobil, but the companies reportedly need the gas for their own LNG plant in the Far East.
As LNG continues to be Gazprom’s weak spot, domestic peer Novatek has almost caught up with state oil and gas majors in terms of capi- talisation after adopting and successfully execut- ing an ambitious LNG strategy.
The Russian government is also reportedly considering opening up LNG exports to more players developing the projects in the Arctic, while Gazprom in cried foul in the past arguing that LNG exports threaten its market position in Europe.
Russia’s goal is to grow the global LNG market share to 20% by 2035.™
PNG commission delays UBS oil loan inquiry
PNG
A Papua New Guinea (PNG) government commission set up to investigate a A$1.2bn ($827.3mn) loan from UBS that the former administration used to buy into Oil Search has once again delayed its inquiry.
Chairman Salamo Injia said on November 4 that the commission had not received the fund- ing the government had promised in September. Injia added that the inquiry still had not com- pleted a tender to hire an international law firm. This is the commission’s second delay, with Injia having originally postponed the start of proceed- ings in October.
“Until these and other outstanding adminis- trative arrangements are completed by the gov- ernment agencies and officers concerned, this Commission is unable to sit today and is unlikely to sit any time soon,” the chairman said.
PNG Prime Minister James Marape had previously agreed to Injia’s requests to extend the inquiry’s duration from three to six months, increase its budget and appoint an international law firm, but the funding has yet to be released and a tender for appointing a law firm has yet to be completed.
If the commission is unable to provide an update by the end of November, then it is expected to announce in December that the inquiry will be held in early 2020.
Marape, who was finance minister when the government bought 10% of Oil Search in 2014, has promised to resign if the inquiry finds him guilty of improper conduct. The government eventually sold the stake at an estimated loss of $420mn owing to the commodity price slump.
Marape became prime minister in May, after taking over from Peter O’Neill, and promptly launched the inquiry.
PNG’s purchase of the Oil Search stake helped the company pay for a holding in the giant Elk-Antelope development, which will underpin the two-train Papua LNG project.
The current administration remains frus- trated over the natural gas agreement signed between O’Neill’s government and Total on the Papua LNG project. Petroleum Minister Kerenga Kua has set his sights on ExxonMobil’s as-yet to-be-agreed-upon P’nyang project, say- ing that he is looking for “far better” terms than were agreed for Papua LNG.™
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w w w . N E W S B A S E . c o m Week 45 13•November•2019