A delegation from French energy giant Total was scheduled to arrive mid-week in Papua New Guinea for discussions on moving the Papua LNG project forward as a standalone development.

Clarity is emerging on the situation following weeks of speculation that two liquefied natural gas schemes — Papua LNG and the P’nyang project — are being separated, or de-linked, in order for Papua to move ahead.

PNG’s Prime Minister James Marape revealed that the Total delegation was to arrive on or around 25 November, with this assertion supported by Oil Search, a major co-owner in both Papua LNG and P’nyang.

Oil Search chief executive Keiran Wulff indicated in the company’s Investor Day 2020 briefing that Papua LNG is a priority for all stakeholders in PNG and is “strongly supported” by the government and the political opposition who are currently locked in an acrimonious power struggle.

Wulff said Papua LNG has become a priority for his own company, and suggested the project could be brought on stream in 2027 at a cost of supply of less than $6 per million British thermal units.

Front-end engineering and design could be completed in 2022 followed by a final investment decision the following year.

PNG is uniquely positioned to fill the emerging LNG supply gap, and Papua LNG has cost-competitive, high-quality rich LNG sought after by north Asian buyers, said Wulff.

The Papua LNG project has for several years been joined at the hip to the ExxonMobil-operated P’nyang gas development.

Together they would underpin the construction of three new LNG trains at the existing PNG LNG location.

Political upheaval and the Covid-19 pandemic have resulted in no progress at all in 2020, and the government has become hostile to an integrated Papua-P’nyang development.

Papua LNG has all the necessary government approvals to proceed, but P’nyang is still some way off reaching those milestones.

Marape said in September that the country had been “unfairly held to ransom" by ExxonMobil and Oil Search, which were "insistent" that P'nyang be part of the Papua LNG project.

Since then, all efforts have gone into separating the two.

The plan, as it stands, would be for Papua LNG to underpin the construction of two new LNG trains at the PNG LNG site near the capital, Port Moresby.

The P’nyang project, meanwhile, will be the subject of more discussions between ExxonMobil and the government, but the likelihood is increasing that P’nyang will be used for backfill, or back-up supply, to the existing trains rather than the source of supply for a new train.

Total said in its third-quarter financial results that it has to be patient about its LNG ambitions in PNG.

Jean-Pierre Sbraire, Total's chief financial officer, said: "This project is ... a low-cost LNG project, very well positioned to supply the Asian markets."

The Papua LNG project is based on the development of the Elk-Antelope gas fields in Block PRL 15.

The co-owners are operator Total (40.1%), ExxonMobil (36.5%), Oil Search (22.8%) and minority parties (0.6%),

The joint venture owners of the P’nyang project are operator ExxonMobil (36.86%), Oil Search (36.86%), Santos (14.32%) and JX Nippon (11.96%).

LNG

Push on for Papua LNG as standalone project