Tag Archives: LNG

KUA: WALKING AWAY WAS BEST

Shirley Mauludu | The National aka The Loggers Times | February 4, 2020

PETROLEUM and Energy Minister Kerenga Kua says the decision to walk away from a deal regarding the P’nyang gas project in Western was made in the “best interest of the country and people”.

The minister, in an interview with The National yesterday, said since Friday, which was the deadline for discussions, he had been getting positive comments from leaders and the public on the decision the State, through the state negotiating team, had made. “Since negotiations collapsed on Friday, a majority of the people, and the leaders that I have spoken to, are clapping their hands,” he said.

“They are happy.

“They say this is the single most positive thing that has ever happened to this country.

“They are very happy about the fact that there is no deal because they are fed up of not receiving a fair share.

“They are clapping their hands because the state negotiating team has done the right thing in asking for what is fair.

“The resource in the ground has been there for millions of years so it can stay in the ground for another few years, it’s not a problem.

“We won’t do a deal in P’nyang but other deals will still go ahead.

“We will still raise revenue in other areas to develop our country.

“P’nyang is not the only place that has development potential for us.

“We are a developing nation.

“We need money for all kinds of things that needs to be developed and we have to make it in this resource, an available resource.

“But if our partners refuse to give us a fair share, we will not be able to deliver up to the people’s expectations.”

Meanwhile, Kua further explained the licence that ExxonMobil had for the development of the project.

“The State does acknowledge that Exxon has some residual rights to the petroleum retention licence,” he said.

“They have in accordance with our law, filed an application for a development licence.

“What they have is a retention licence.

“Our law says that before that licence expires, you can apply for a development licence and if you do so, your rights under the retention licence continue even though it had already expired until your application for development licence is fully decided by the petroleum development board.

“That’s the reason why, we were able to do the negotiations.”

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Papua New Guinea LNG expansion plans in limbo after talks collapse

Sonali Paul | Reuters | February 2, 2020

Plans to double gas exports from Papua New Guinea within the next four years are in doubt after the government walked away from talks with Exxon Mobil Corp on a key gas project needed for the $13 billion expansion.

Papua New Guinea Prime Minister James Marape on Friday called off negotiations with Exxon on the P’nyang field, blaming the energy giant for failing to budge on a proposed deal that was “out of the money.”

The expansion of liquefied natural gas exports is crucial for the impoverished Pacific nation, but is vying with several proposed LNG projects in Australia, Mozambique, Qatar, Russia and the United States.

One of Exxon’s partners in the PNG project, Oil Search Ltd , said on Monday the terms the government had sought would have made the project unprofitable.

“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,” Oil Search said in a statement to the Australian stock exchange.

Shares in Oil Search fell as much as 11.5% early on Monday in their first session since the collapse of the talks, on track for their worst one-day fall in more than four years.

The P’nyang agreement was one of two agreements needed for Exxon and its partners to go ahead with a $13 billion plan to double LNG exports from the Pacific nation. The other agreement, the Papua LNG pact, was sealed with France’s Total SA in September.

The government was seeking terms on P’nyang 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 negotiated in 2008 for its PNG LNG project, a person close to the negotiations said.

P’nyang and Total’s Papua LNG project were designed to feed three new processing units, called trains, at Exxon’s PNG LNG plant, with the two projects sharing infrastructure in order to save $2 billion to $3 billion dollars on construction costs.

Oil Search said on Monday it would now focus its attention on the Papua LNG project, which will feed two new trains, adding 5.5 million tonnes per annum (mtpa) to the plant’s 8 mtpa capacity. Joint venture partners are set to meet “in the short term” to plan their next steps, it said.

Bank of America analysts estimated that separating the projects would pare the cost savings by a third and delay first production from Papua LNG by 18 months to 2026.

“The two projects are rather entwined. There’s a bit of uncertainty now. Everything’s going to be delayed for quite a period of time,” said Andy Forster, senior investment officer at Argo Investments, which owns Oil Search shares.

Exxon Chief Executive Darren Woods said on Friday the company hoped to revive talks on P’nyang to get to a “win-win proposition” but flagged that the company was in no hurry as it had other projects it could advance elsewhere.

“But I also think we’ve got some time given all the other opportunities in front of us and, frankly, given where we’re at today in the supply-demand balance of LNG,” Woods told analysts on the company’s quarterly earnings call last Friday.

A global glut of LNG has driven spot LNG prices to more than 10-year lows below $4 per million BTUs (mmBTU), posing challenges for projects looking to line up long-term customers.

PNG Prime minister James Marape, who came to power last May on a pledge to reap more benefits from the country’s abundant mineral and energy resources, on Sunday said he was comfortable with the hard line he had taken.

“I am sorry but if you show little respect to our motive to gain extra for the country, you will lose my support,” Marape said in a post on Facebook.

Total has made no comment on the collapse of the P’nyang talks.

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PNG Petroleum Minister Kua brushes aside claims of Threats on Gas Project

NBC News | 23 January 2020

Papua New Guinea Petroleum Minister Kerenga Kua has brushed aside claims of threats to close gas projects in Western Province.

This follows, Governor, Taboi Awi Yoto and North Fly MP, James Donald claims, the State Negotiating Team has poorly negotiated for the province and the landowners over the P’nyang Gas Project’ with the developer in Singapore last week.

The leaders have threatened the government to close P’nyang and Stanley LNG Projects before the close of business this Friday until the Oil and Gas Act is amended.

In his response, Minister Kua says constitutional law allows all minerals and petroleum is owned by the State and not by provinces and landowners.

He said only the State is empowered to commercialise these resources, and no other entity is by law empowered to do this.

Mr. Kua said leaders at all levels are entitled to express their views on issues related to resource project negotiations but State will make the final decision.

The Petroleum Minister urges leaders to remain calm as P’nyang Ministerial Committee is always on hand to discuss any discontentment.

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Governor says people still waiting on LNG promises

The National | December 2, 2019

THE PNG LNG project is yet to deliver the billions of kina promised to the people of Southern Highlands but the operator is already accelerate production of gas from the fields in the province, says Governor William Powi.

Powi said as part of developing the P’nyang project, the proponents were trying to use the PNG LNG gas fields in the province to produce gas between 2024 and 2028 under the Associated Gas Development.

He claimed it would deplete the gas quickly while they are waiting for the P’nyang gas to come into the PNG LNG third train.

He said the plan would have a negative impact.

Powi said the landowners and provincial government had been promised billions in development levies and royalties.

They had allowed for capital expenditure deductions by way of depreciation allowance in calculation of royalty and development levy, allowing capital uplift premium and allowing for operating expenditure recovery in the calculations.

In fact, the 2 percent royalty and development levy becomes less than 1 per cent, an acceleration of the cheating by the developer.

“This should not be allowed at the expense of the people of Southern Highland and its landowners,” Powi said.

He said the development levy and royalty should be calculated at 2 per cent gross value of well head and not 1 percent “as we are currently receiving”.

He told Petroleum and Energy Minister Kerenga Kua in Parliament that the people would continue to be marginalised with the use the PNG LNG gas fields in Kutubu, Moran, Agogo, South East Mananda and Gobe oil under the Associated Gas Development.

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Talks on PNG LNG expansion at a standstill – govt

PNG Liquefied Natural Gas Plant near Port Moresby. Photo: Richard Dellman.

Radio New Zealand | 28 November 2019 

Talks with oil and gas giant Exxon Mobil over an expansion of their huge LNG (Liquefied Natural Gas) project in Papua New Guinea are at a standoff, with the company unwilling to negotiate on the country’s terms, says PNG’s petroleum minister.

Kerenga Kua said the state’s negotiating team had set out draft terms for negotiations on developing the P’nyang gas field that were in line with international standards and would ensure a “fair deal” for PNG.

It was disappointing that Exxon has refused to consider the terms and PNG urged them to reconsider their position.

Reuters reports that the new delay to the P’nyang agreement will make it harder for Exxon and its partners Total SA, Oil Search and Santos Ltd to reach a final investment decision in 2020 on their plans to double LNG exports from the country.

Exxon Mobil’s PNG spokesman said discussions with the PNG government were ongoing and an agreement was needed before decisions could be made on preliminary engineering and design for the expansion of its PNG LNG plant.

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Papua New Guinea, Exxon to start talks on revising P’Nyang gas deal

Reuters | November 15, 2019

Papua New Guinea is set to start talks with Exxon Mobil Corp to negotiate better terms for the state from the P’Nyang Gas Project, Minister for Petroleum Kerenga Kua said on Friday.

“All things going well we can expect to sign a P’Nyang Gas agreement around the end of this month,” Kua said in a statement mailed to Reuters.

The project will help feed an expansion of Exxon’s PNG LNG plant, in which Australia’s Oil Search and Santos Ltd are also stakeholders.

Talks over the project were put on hold earlier this year, when the government sought to revise a separate LNG agreement it has with French energy firm Total in which Exxon is also involved.

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PNG LNG production, loading curtailed by damage at facility: Oil Search

Srijan Kanoi | S&P Global Platts | 28 August 2019

The mooring system at the Oil Search operated Papua New Guinea production facility was reported to be damaged, causing loading and production disruptions, the company said in a statement to the Australian Securities Exchange Wednesday.

“As a precautionary measure, Oil Search temporarily suspended scheduled liquids loading last week. In addition, to extend the liquids storage available in the liquids export system, the company curtailed production from the Oil Search-operated oil fields and the PNG LNG operator partially reduced PNG LNG production,” Oil Search said in the statement.

The company added that due to adverse weather and sea conditions in the Gulf of Papua, the inspection of the mooring system could not be carried out yet.

Oil Search said that they developed a temporary solution for safe berthing and loading of vessels at the facility, which enabled liquids loading to resume at a reduced rate from August 25.

LNG Vessel Kumul is currently anchored at Port Moresby since August 26, waiting to load a cargo from the PNG LNG facility, cFlow, Platts trade flow software showed.

No ships left the port between August 18 to August 25, the data showed. The last LNG vessel to load a cargo and sail from Port Moresby was Maran Gas Leto, which entered the port on August 23 and sailed on August 25, according to Platts cFlow.

Oil search said that they were working closely with the PNG plant operators to ramp up LNG production back to normal. However, they added that it was currently unclear whether it would be necessary to adjust their 2019 production estimate, due to the damaged mooring system and the resultant loading issues.

PNG’s LNG facility has an annual nameplate capacity of 6.6 million mt of LNG, according S&P Global Platts Analytics.

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