Page 11 - AsiaElec Week 08 2022

AsiaElec COMMENTARY AsiaElec

review resources laws and agreements as a pri- P’nyang, while Santos has 38.5% and JX Nippon
ority, with a view to obtaining greater benefits for owns a 12.5% stake. Local media reported this
the country. Indeed, the Papua LNG deal had to week that under the new agreement, the PNG
be renegotiated, with a new fiscal stability agree- government would have a 34.5% equity stake in
ment unveiled in early 2021. Meanwhile, talks the project – significantly higher than its 22.5%
between the PNG government and ExxonMobil interest in Papua LNG and 19.6% in the original
over the expansion of PNG LNG and the devel- PNG LNG.
opment of P’nyang stalled repeatedly, leading to The reports said ExxonMobil had agreed to
considerable doubt over the project’s fate. sell 12% at “fair market price” to PNG parties.
Oil Search – then a partner in both projects – However, a larger proportion of the equity stake
said in late 2020 that it would focus on advancing in the field would need to be sold in order for
Papua LNG alone, having previously been pur- PNG to take 34.5% in the field. Thus the new
suing a twinned development of both facilities. ownership structure when accounting for PNG’s
The original plans called for the addition of stake in the project still needs to be confirmed.
three trains – two at Papua LNG and one at PNG Meanwhile, Reuters also reported that the
LNG – as an integrated development, with the government had secured a take of 63% under
two projects located next to each other and shar- the P’nyang gas field deal, compared with 49%
ing infrastructure. But when plans to develop in PNG LNG and 51% in Papua LNG.
the additional train at PNG LNG looked par- “This is a massive win ... and also sets a new
ticularly uncertain, Oil Search indicated that it benchmark for future negotiations,” the PNG
would turn its attention to what would initially Prime Minister’s Office said.
be a two-train development at Papua LNG. It Development of P’nyang is proposed to begin
cited interest from all parties involved in simpli- after the 5.4mn tonne per year (tpy) Papua LNG
fying plans for expansion of PNG’s liquefaction project is brought online, which is currently tar-
capacity. geted for 2027. The field is estimated to hold 4.36
Following this week’s breakthrough, though, trillion cubic feet (123bn cubic metres) and is
the prospects for P’nyang’s development and the anticipated to take about four years to develop
expansion of PNG LNG have improved consid- once construction starts.
erably. However, the project now looks different PNG LNG currently has a nameplate capac-
compared with the original proposal, having ity of 6.9mn tpy, but can produce up to 8.5mn
become decoupled from Papua LNG during tpy at its peak. The breakthrough for P’nyang
negotiations over the past couple of years. comes at a time when LNG demand is rising. In
its annual LNG market outlook this week, Shell
What next? said it anticipated demand for the super-chilled
ExxonMobil currently owns a 49% interest in fuel almost doubling to 700mn tpy by 2040.™

Week 08 23•February•2022 www. NEWSBASE .com P11