PNG aims to attract more oil exploration

Papua New Guinea (PNG) aims to attract more oil exploration activity as the country changes its fiscal regime for upstream projects in 2025 following a near 30-year decline in oil production.

PNG's oil production peaked at around 120,000 b/d in 1993 and last year output dropped to about 10,000 b/d, PNG department of petroleum secretary David Manu told delegates at the 16th PNG Mining and Petroleum Investment Conference in Sydney.

"We would like to see oil production rise again and we are trying to create the right fiscal and regulatory conditions to encourage more oil exploration in frontier basins offshore Papua New Guinea," Manu said.

Most of PNG's oil and gas production is onshore. PNG is moving to a production-sharing regime in 2025 from the prevailing concessional contract regime where upstream firms are liable to pay royalties based on production. All participants, including the PNG state, will share the profits from upstream ventures under a production-sharing regime.

PNG is also planning to create a national petroleum authority that will issue exploration and production licences. These permits are currently issued through the PNG petroleum and energy department. A national petroleum authority will be modelled on PNG's mineral resources authority, which issues mining exploration and production licences.

But PNG has emerged as a LNG exporter in the past decade. ExxonMobil started up the 6.9mn t/yr PNG LNG venture in 2014, which has consistently produced above nameplate capacity. The project partners in the 5.3mn t/yr Papua LNG next year plan to sanction their project.

PNG's transition from an oil producer to a LNG exporter mirrors Australia, which was saw oil output peak around 2000. It now has to import around 80pc of its transport fuel requirements, while emerging as one of the world's largest LNG exporters.

By Kevin Morrison