By MarEx 2015-04-22 23:59:04
First shipments from a new LNG project in Papua New Guinea operated by Total are expected in 2021, a top executive involved in the project said on Wednesday.
Total and its partners InterOil and Oil Search plan to begin marketing a total of 6.8 million tons of LNG per year from the project mainly to buyers in China and Japan by the end of this year, said Keli Taureka, executive vice president of InterOil, in an interview.
The project will become the country’s second, after ExxonMobil in May last year began exports from its $19 billion PNG LNG project.
The new project, drawing gas from Papua New Guinea’s biggest undeveloped gas deposit, the Elk and Antelope fields, hopes to take advantage of many LNG contracts expiring in North Asia around that time, Taureka said, adding he expected Chinese demand to double.
Interoil has stated that the Elk-Antelope gas field is potentially the lowest cost newbuild LNG project in the world.
Earlier this year, interOil’s Managing Director Michael Hession told Business Advantage PNG that it is closer to the coast and Port Moresby than other major gas fields in Papua New Guinea, and it is close to a major river, an important cost benefit when transporting people and equipment.
“The gas field is in a less-mountainous region than other major gas fields, a big factor in development cost, and, it is within Papua New Guinea’s least populated province, a key factor in negotiating land access,” he said.
However, the project may face competition from LNG from North America and Australia, where projects will ramp up towards the end of the decade.
Asian LNG prices have more than halved since last year in tandem with lower oil prices, and as demand growth fails to keep up with new supply.
Preliminary estimates show the Elk and Antelope fields hold 5-9 trillion cubic feet of natural gas, although reserves will only be confirmed once an appraisal study is complete by the middle of this year, Taureka said.
Total bought a 40.1 percent stake in the project from InterOil in April last year for $429 million. The sale was disputed by Oil Search, which claimed it had the right to buy the stake, but lost the case in international arbitration.
Total has made few comments on the project, but said on its website that Papua New Guinea holds the right to acquire a 22.5 percent stake in the project once a final investment decision has been made, which would lower Total’s stake to 31.1 percent.
InterOil has a 36.5 percent stake in the project, while Oil Search holds about 23 percent.
InterOil has undergone a corporate reorganization and divested downstream assets in PNG to focus on the development of Elk-Antelope project.