Page 6 - AsiaElec Week 05

AsiaElec COMMENTARY AsiaElec
PNG walks away from P’nyang gas talks
The government has halted talks with ExxonMobil over the P’nyang natural gas development
PNG
A planned $13bn expansion of Papua New Guinea’s (PNG) liquefied natural gas (LNG) export capacity is set for lengthy delays a er the government walked away from talks with Exx- onMobil on a key gas project.
PNG Prime Minister James Marape decision to end the talks has once more le the P’nyang gas eld development in limbo.
e P’nyang project, located in the Western Highlands, will support a three-train expan- sion of ExxonMobil’s PNG LNG terminal at Caution Bay near Port Moresby. Under the pro- posedexpansion,onetrainwillusegasfromthe P’nyang and PNG LNG elds as feedstock, while two trains will use gas from the Total-led Papua LNG project.
The government has tried for months to secure better terms from the expansion’s lead partners, rst from Total and then ExxonMo- bil. e government approved the Papua LNG gas agreement in September a er Total agreed to make several minor concessions. However, Energy Minister Kerenga Kua warned at the time that the government would expect “far better” terms on P’nyang.
Breakdown
Oil Search, a partner in the P’nyang project, said on February 3: “Under the terms proposed by the state, the joint venture partners were unable to obtain a return on their investment that made the project investable and bankable.”
Reuters quoted an unnamed source close to the negotiations as saying on February 2 that the government had been seeking terms that would “give the state more than the 45-50% take that PNG is set to reap on the returns from the Papua LNG project, and well above the terms Exxon negotiatedin2008foritsPNGLNGproject”.
ExxonMobil operates Petroleum Retention Licence 3 (PRL 3), which contains P’nyang and will feed a new 2.7mn tonne per year (tpy) train, with a 36.86% stake. Oil Search also owns 36.86% of PRL 3, while Santos has 14.32% and Merlin Petroleum holds 11.96%.
Total, meanwhile, operates the PRL 15 joint venture – which is developing Papua LNG’s Elk-Antelope gas discovery – with a 31.1% interest post the state’s back-in right of 22.5%. ExxonMobil owns 28.3% and Oil Search has the remaining 17.7%.
WHAT:
The failure to nd common ground will likely delay plans for new LNG export capacity
WHY:
The P’nyang development was a key part of the planned expansion of the PNG LNG project
WHAT NEXT:
Both sides may prefer for new petroleum laws to be passed before nalising any deal
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w w w . N E W S B A S E . c o m Week 05 05•February•2020