ExxonMobil and Papua New Guinea (PNG) will restart negotiations over the development of the P’nyang gas resource that the US major wants to develop as part of a phased liquefied natural gas (LNG) export project.
“A series of workshops regarding the development of the P’nyang Gas fields will take place over the next couple of weeks and if all goes well, we can expect to sign a P’nyang heads of agreement around the end of this next month and a Gas Agreement thereafter,” PNG Minister for Petroleum, Kerenga Kua, said on Friday.
This potentially opens the opportunity for a third LNG processing train to be added to TotalEnergies-led Papua LNG. The original plan included developing P’nyang alongside Papua LNG as a phased development, but ExxonMobil has yet to agree development terms with the government. PNG has been holding out for a better deal that provides more benefits for the Pacific Island nation.
“The benefits of phasing the construction of both Papua and P’nyang projects over an eight-year period shall be a substantial boost to the economy and the country. This tremendous investment would extend our gas pipeline infrastructure into the country’s Western Province and have a meaningful and lasting economic impact for PNG and its people,” said Kua.
Although Kua is making positive noises, earlier this month the government of PNG again changed the agreed fiscal terms for Twinza Oil’s proposed Pasca A gas project, which would be the country’s first offshore development. Significantly, the move underscored the increasing political risk for resource investors, such as ExxonMobil, in the country.
Still, Energy Voice reported last month, that the critical deal between ExxonMobil could be announced next month. The arrival of new boss, Peter Larden, who has taken over the role of managing director at ExxonMobil in PNG from Andrew Barry, could help smooth over the differences that have thwarted a deal so far.
The development of ExxonMobil-operated P’nyang, known as the PNG LNG T3 scheme, was part of a three-train LNG expansion project proposed in 2018. The two other trains were part of the TotalEnergies-led Papua LNG project, with total capacity of 8 million tonnes per year (t/y). Two sets of fiscal terms were required to proceed with front-end engineering and design (FEED) work on the expansion project. A set of terms for the Papua LNG project was agreed upon in 2019. The P’nyang Gas Agreement is the second set of terms for the P’nyang Area where negotiations have stalled.
TotalEnergies and its partners are targeting to start FEED work at the Papua LNG project, led by the French company, next year. TotalEnergies operates the Elk and Antelope onshore fields and is the largest shareholder of the PRL-15 permit, which will supply Papua LNG, with a 31.1% share, alongside partners ExxonMobil (28.7%) and Oil Search (17.7%), post the State back-in right of 22.5%.
“Together with our joint venture partners, we look forward to working closely with the PNG Government and the landowners to progress the P’nyang field development proposal and secure the licenses needed to develop this important resource,” Larden, ExxonMobil’s boss in PNG, said Friday.
The P`nyang Area consists of two fields, P`nyang and P`nyang South. The fields are located approximately 130 kilometres northwest of Hides, the main PNG LNG field, in the Highlands of Papua New Guinea. P`nyang was discovered by Chevron in 1990 and P`nyang South by ExxonMobil in 2012.