Tag Archives: Oil Search Limited

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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Ex-US Interior official joins Papua New Guinea-based oil company Oil Search

Oil Search CEO Peter Botten

Having been instrumental in saddling PNG with the crippling UBS loan, Oil Search again shows contempt for business and political ethics

Tim Pearce | Washington Examiner | September 04, 2019

An ex-top official in the US Interior Department is joining a Papua New Guinea-based oil company days after leaving the Trump administration.

Joe Balash served roughly two years as the Department of the Interior’s assistant secretary for land and minerals management. Balash announced his departure from the government on Friday and confirmed his new position at Oil Search in an interview with the Washington Post on Tuesday.

Balash’s work at the Interior included expanding oil development on federal lands in Alaska, such as the 1002 Area in the Arctic National Wildlife Refuge. The 1002 Area is a 1.5 million-acre oil reserve created in 1980 as part of the same legislative package that established ANWR.

The Trump administration’s ethics pledge, which Balash signed after joining Interior, prohibits ex-administration officials from lobbying their former agencies for five years after they leave. Oil Search’s operations in the United States include Alaska, though the company’s business is largely on state lands.

Balash will work on energy policy for Oil Search. He said he will abide by the ethics pledge and refrain from lobbying Interior officials, but “I’ll supervise those who do” need to work with the federal government.

“I have a ton of restrictions dealing with the Department of Interior,” Balash said. “Most of Oil Search’s properties are state lands. There isn’t really the federal nexus.”

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Papua New Guinea sticks to gas deal with Total for $13 billion project

GOVERNMENT SURRENDERS

Sonali Paul | Reuters | September 3, 2019

Papua New Guinea said on Tuesday it will honor a gas deal that Total SA signed with a previous government for a $13 billion plan to expand gas exports, after securing minor concessions from the French company.

The decision removes uncertainty over the plan to double liquefied natural gas (LNG) exports from the Pacific nation that arose after new Prime Minister James Marape came to power in May promising to win more benefits for the impoverished country.

The Papua LNG gas agreement is one of two agreements needed for Total and its partners, Exxon Mobil Corp and Oil Search Ltd, to go ahead with the LNG expansion plan.

“The government has now cleared Total to proceed full steam ahead with the implementation of the Papua Gas Project,” Petroleum Minister Kerenga Kua said in a statement.

Doubts about the gas deal escalated in August, when the government suddenly called for talks to revise the agreement.

Kua said Total had made some concessions, promising to prepare a detailed plan outlining how much local equipment and services would be used in the project and to negotiate with any third party wanting access to the project’s petroleum pipelines.

It would also be willing to negotiate for Papua New Guinea to take a stake in the pipelines after the state has repaid all its loans and costs on the project, and would consider buying LNG carriers in a joint venture with the state.

“Most of these are substantial new concessions on potential future benefits,” Kua said.

The companies had insisted that the Papua LNG gas agreement that Total signed in April should be honored, and Oil Search warned in August that costs on the project could rise if it was delayed by prolonged talks.

An analyst said the government had capitulated to Total, winning only non-committal offers to consider future steps that might benefit the country.

“This is a big win for the industry, but they can’t say that, because they need to let the prime minister and Kua save a little political face,” said the analyst, who declined to be named due to the sensitivity of the issue.

The three companies welcomed the government’s decision.

“We are looking forward to working with the Government of PNG to conclude the required gas agreement for the P’nyang project,” Exxon Mobil said in an emailed comment, referring to the second of the two agreements needed.

Oil Search’s Managing Director Peter Botten said the project would “help deliver billions of kina in value to the PNG economy, support local businesses and provide greater employment opportunities for thousands of Papua New Guineans,” referring to the PNG currency.

Shares in Oil Search, which have dropped over the past three months amid uncertainty over the gas agreements, closed 2.1% higher shortly after the government’s announcement in a flat broader market.

“There should be a handsome re-rating,” Adrian Prendergast, an analyst at Morgans, said a day ahead of the announcement.

“In the time the political developments have been happening it (Oil Search) has really derated more than the total value that we place on this expansion.”

At Monday’s close, Oil Search shares were down about 14 percent since the previous prime minster stepped down.

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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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Papua LNG Talks In ‘Mexican Standoff’ As Govt Seeks New Gas Deal

Post Courier | August 21, 2019

The Papua LNG negotiations in Singapore have broken down into a ‘mexican standoff’ between two major oil conglomerates and the PNG government.

Talks centred on the Papua LNG agreement, signed early this year between developer Total of France and the PNG government. Hopes were high, there was an air of anticipation. But over the weekend in Singapore, the talks in Asia’s scenic garden city state never eventuated. Instead, details are all being hushed up although there is really nothing to hide as each camp retreated their home countries.

The PNG government delegation led by Petroleum Minister Kerenga Kua returned quietly, empty handed and in low spirits.

The government is seeking to re-adjust the agreement, which seeks, among others, more for landowners. Total executives have shied away from an official comment as they told the paper the statement will have to be sent back to France for approval from the hierarchy which will take a week.

ExxonMobil and Oil Search Limited, the other big two in Papua New Guinea remained zipped.

But insiders from Singapore say that the big French oiler Total and powerful US ‘conglomerate’ ExxonMobil refused to back down from demands already made public by the PNG government.

The oil and gas giants remain adamant that PNG government to respect the gas agreement signed this year. The insiders said that there was more at stake if the agreement was aborted and so much money already wasted. They also told the Post-Courier from Singapore that whatever the outcome, the players were ready to take the matter to court.

“The PNG government must respect the agreement that was signed and there’s so much at stake if the deal is aborted. Of course the company stands to lose but the biggest losers will be the State,” the insider said.

“The players spent billions of US dollars to get to where they are right now.

“What if they sue the State and ask for all the monies to be reimbursed? I mean you not looking at millions, you looking at billions.”

Gulf Governor Chris Haiveta, who is leaning towards the developers, is in Australia for the investment conference in Sydney. He is also not talking to the media yet.

Mr Kua is back in Moresby, his return, quiet and unheralded. He said late last week before heading to Singapore that the deal for the Papua LNG project could be modified if a government review found its terms unfavorable.

But early this week, he cautioned that considering what was at stake, the people’s expectations must be guarded during this period.

“The negotiations could work out well or even disastrously, but either way, the people must be ready to accept whatever outcome.”

Yesterday the PNG government was contacted but the paper was advised an official statement will be released by before end of the week.

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Oil Search on tenterhooks over Total’s Papua New Guinea gas deal

Is PNG exacting payback on Oil Search for the UBS loan debacle?

Sonali Paul | Reuters | August 20, 2019

Oil Search warned on Tuesday that costs for a $13 billion plan to double gas exports from Papua New Guinea could rise if talks on a gas agreement between the government and Total SA drag on beyond next week.

Australia-listed Oil Search is a partner in Total’s Papua LNG project and Exxon Mobil Corp’s  PNG LNG project, which together aim to double LNG exports from the impoverished Pacific nation to around 16 million tonnes a year.

PNG’s new petroleum minister, Kerenga Kua, last week suddenly set out to renegotiate a gas deal with Total, which the company had signed in April with the previous government. Neither side has commented on the talks held last week in Singapore.

Oil Search Managing Director Peter Botten said on Tuesday further talks are planned this week and next week, with the aim of reaching an agreement by the end of August.

“It’s a dynamic environment at the moment,” said Botten, who was in Singapore during the talks, adding that he had been fully briefed on them.

He declined to comment on what issues have yet to be resolved or say how confident he was a deal would be done by the end of next week.

“I’m not going to put odds on it,” Botten told Reuters in an interview.

“We’re doing whatever we can to work with whoever we can to try and get this resolved as quickly as possible. Time is running out though.”

Botten has led Oil Search, PNG’s biggest company, for 26 years and has faced delays on projects before, but said the current uncertainty was rare in a country that has had a “very stable fiscal regime” for many years.

“It’s unusual that this is happening at such a critical time in the project.”

The Papua LNG project had already lined up bids from contractors to do preliminary engineering and design work, but those are due to expire in September, he said.

The companies risk having to pull together new bids if the existing bids fall over, and could face higher costs.

“It would be done in a market that probably would have a higher level of expenditure as the capacity in the market gets soaked up by new projects in other parts of the world,” Botten said.

Oil Search on Tuesday reported its half-year profit more than doubled to $161.9 million for the six months ended June 30 from a year earlier, just ahead of a consensus estimate of $160 million, on strong output from the PNG LNG project and higher oil-linked LNG prices.

The result last year was hurt by a shut down of PNG LNG following a major earthquake.

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$14bn PNG LNG expansion hangs by a thread

Esmarie Iannucci | Mining Weekly | 15 August 2019

The share price of ASX-listed Oil Search stumbled on Thursday after the government of Papua New Guinea (PNG) sent a delegation to Singapore seeking to renegotiate the terms of the PNG liquefied natural gas (LNG) agreement, signed in April this year.

Minister for Petroleum Kerenga Kua said on Thursday that the agreement was signed by the previous PNG government, in a period when “serious moves” were being made to remove and replace said government.

He added that the new government took office in May with a firm view that the PNG gas agreement was disadvantageous to the state, and was seeking to renegotiate the deal.

Kua warned that the negotiations could work out “disastrously” but said that the people of PNG had to be ready to accept the outcome.

The efforts to renegotiate the PNG LNG agreement come despite the PNG government’s earlier assurances that it would, in principle, stand behind the signed agreements in the best interest of the State.

At the time, however, the government reserved the right to discuss “a shortlist of matters” with the project proponents.

Oil Search MD Peter Botten on Thursday said that the company was looking forward to gaining further clarity on the PNG government’s position regarding the agreement, which was inked in April this year, and the ways forward for the project.

The April agreement between the PNG government, Oil Search and ExxonMobil, and operator Total SA defined the fiscal framework for the PNG LNG project, and included a domestic market obligation, a deferred payment mechanism for the State’s payment of past costs, and a national content clause to support local workforce development and the involvement of local businesses.

The agreement gave the project proponents the confidence to start the initial work on a $14-billion plan to double the expansion of LNG in PNG to around 16-million tonnes a year.

The expansion plans include three new 2.7-million-tonne-a-year trains at the PNG LNG project, two of which will be operated by Total on its own acreage, while the third will be operated by ExxonMobil and fed from its existing and new gasfield P’nyang.

A final investment decision on the expansion is targeted for 2020. 

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