Papua New Guinea’s government is happy to take its time in reaching a deal over the P’nyang gas project agreement.

The chairman of PNG’s State Negotiating Team reaffirmed its position on Monday with chairman Isaac Lupari stating it was important the government “get a good deal, not a fast deal”.

“This is vital to generate revenue and wealth creation from development of nation building projects in PNG,” he added.

“The key issue for PNG is to learn the lessons from the PNG LNG project and recently signed Papua LNG project agreement. What is essential to PNG is to develop the P’nyang Field in a timely fashion, on terms similar to other countries.”

Lupari stated one of the current arguments was over commercial terms, with PNG determining it could achieve state benefits greater than those in the recent Papua LNG agreement, while also delivering “attractive” returns to operator ExxonMobil and its partners.

“We’ve already suggested to Exxon how we can resolve this sharing of benefits of the project based on international best practice,” Lupari said.

The State Negotiating Team also stated another issue centred around certainty of the field being developed to a reasonable timeline with clear milestones.

It claims ExxonMobil is refusing to commit to any timeline until a petroleum development licence is issued over P’nyang, however Lupari claimed issuing a PDL before prerequisites are completed for a final investment decision would allow the US operator to defer the development.

“A timeline for development must be one of the fundamental conditions in any agreement,” said Lupari.

“Not agreeing to this makes us wonder if the developers really have any current plans to develop the project, or instead intend to warehouse the field. That kind of flexibility means the country may get no benefit - only costs - in the foreseeable future.”

P’nyang partner Oil Search has previously stated that the signing of the P’nyang agreement was being targeted for the end of the year.

Santos, which recently struck a deal to farm in to P’nyang, believes the field contains gross best estimate contingent resources of 4.4 trillion cubic feet of gas.

Production capacity is likely to be in the region of 750 million cubic feet per day of gas, with a large onshore production station to be installed at the field location.

A new 250-kilometre onshore gas pipeline will transport gas to the Kutubu field to join the existing gas export pipeline to ExxonMobil’s PNG LNG facility.

The development forms part of ExxonMobil’s three-train expansion plans at PNG LNG, with one train to receive P’nyang gas and two trains to be supplied by Papua LNG.

The joint venture owners of the P’nyang project, following the completion of Santos’ farm-in, will be operator ExxonMobil on 36.86%, Oil Search with 36.86%, Santos on 14.32% and JX Nippon with 11.96%.

Field Development

P'nyang talks continue