PNG LNG Project to Start Delivering in 2014

Australia's Oil Search said in its 2012 annual report that company’s liquefied natural gas (LNG) project in Papua New Guinea (PNG) will most likely execute its first deliver in 2014. 

The project has already signed deals with four Asian buyers to supply LNG. The capital cost of the project up to first production is estimated at $19 billion from earlier estimate of $15.7 billion, the report said. The project was 75 percent complete by the end of 2012.

Oil Search has a 29% interest in the PNG LNG project, a 6.9 mTPA LNG development operated by Esso Highlands, a subsidiary of Exxon Mobil Corporation. The project will develop gas and condensate resources from three gas fields and associated gas from four oil fields, located in the highlands of PNG. The gas will be transported by onshore and offshore pipeline to a two-train gas liquefaction plant located approximately 20 kilometres north-west of Port Moresby.

The Australian firm believes there is considerable gas resource upside within the existing PNG oil and gas fields, most notably in the Hides gas field, which is not yet fully constrained. Eight wells are planned to be drilled on the Hides structure as part of the PNG LNG project development plan, it said.

“Given the capacity increase and substantially higher oil and gas prices than assumed at Project sanction, PNG LNG remains a highly robust economic project,” the annual report said.