Oil Search rules out third train at PNG LNG

Australian independent Oil Search said its partners in Papua New Guinea (PNG) are working on a four LNG production train plan, which means there is no proposal to add a third unit at the 6.9mn t/yr PNG LNG and the focus is solely on the development of the two-train 5.33mn t/yr Papua LNG.

Oil Search and its partners outlined plans last November to focus on developing Papua LNG, which is operated by Total, pausing on plans to add a third train at PNG LNG that is operated by ExxonMobil. The third PNG LNG train was to be developed together with Papua LNG, as both projects will share infrastructure with the liquefaction plant for Papua LNG being built beside the existing one at PNG LNG.

"We are working to a four-train scenario in PNG, we are not looking at a third train at PNG LNG, but we have yet to sign the agreement for the development of the P'nyang gas field and the terms of that agreement will confirm what the field will be used for," said Oil Search chief executive Keiran Wulff after the firm released its fiscal results for 2020.

Oil Search has a 22.8pc stake in Papua LNG and a 29pc stake in PNG LNG. ExxonMobil has a 37.1pc stake in Papua LNG and 33.2pc in PNG LNG.The Papua LNG partners earlier this month signed a fiscal agreement with the PNG government, which covers the terms the project partners will pay to Port Moresby once the project is in operation.

The firm said last month that production from PNG LNG is expected to produce lower volumes in 2021 compared with a record 8.8mn t last year because of planned maintenance.

Oil Search ruled out selling its PNG LNG stake to fund its share of costs for developing the $3bn, 80,000 b/d Pikka oil field in the North Slope region of Alaska that it has started initial engineering work on.

Oil Search is working with its Pikka partner Spanish oil firm Repsol to jointly sell a combined 30pc stake in the project, as well as having the option where both firms sell their stakes independent of each other. Repsol also plans to sell a 15pc stake to reduce its interest in the project to 34pc.

Oil Search posted a loss of $320.7mn in 2020 from a profit of $312.4mn in 2019.

By Kevin Morrison