ExxonMobil and the Papua New Guinea government are getting closer to agreeing the key fiscal terms for the P’nyang gas project that will kick-start the country’s three-train liquefied natural gas expansion.

The P’nyang Gas Agreement is crucial because it will enable front-end engineering and design to begin on the Total-led Papua LNG project and the three 2.7 million tonnes per annum expansion trains, and eventually P’nyang.

The negotiations between P’nyang operator ExxonMobil and PNG’s state negotiating team, the SNT, have been ongoing for months, and have missed several deadlines.

Well-placed sources said a number of issues have been resolved and closed during recent meetings in Singapore, Sydney and this week’s gathering in PNG's capital, Port Moresby.

The objective is to agree on the key terms of the agreement, but no timeline is being suggested.

“The bottom line is that both sides can’t keep going on and on,” said one well-placed source.

“We’ve already missed deadlines, and meanwhile the LNG market moves on without us.”

Gas agreement negotiations for any resource project in PNG are always complicated, but P’nyang is particularly complex because the government wants better terms for PNG than for previous projects. The SNT itself comprises people with quite different agendas, said PNG sources.

The SNT said last week: “Negotiations are ongoing and are moving towards a deal. What is essential to PNG is to develop the P’nyang field in a timely fashion, on terms similar to other developing nations. We need a good deal, not a fast deal.”

“A timeline for development is also a fundamental condition for any agreement, so we can be certain the field will be developed as soon as possible and make sure the fields are not warehoused,” added the SNT.

The joint venture owners of the P’nyang project are operator ExxonMobil and Oil Search each on 36.86%, Santos on 14.32% and JX Nippon on 11.96%. These same companies own the existing PNG LNG facility.

Santos said recently the P’nyang 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 the PNG LNG facility.

One of the three new LNG trains at the PNG LNG facility will be dedicated to P’nyang gas.

LNG

Talks in PNG moving towards a deal over P'nyang gas project