A slew of new LNG developments by multinationals and a domestic-led project are gearing up to start tapping Papua New Guinea’s estimated 25 trillion cubic feet of recoverable gas reserves, indicating positive future outcomes for PNG’s 15 million people, provided the benefits are distributed fairly.
There may be more reason to celebrate the upcoming 50th anniversary of Papua New Guinea’s independence, with a project pipeline worth nearly $80 billion and several LNG projects almost ready for final investment decisions, pointing to a
brighter future for the young country.
No new greenfield resource projects, including mining initiatives, have begun production in Papua New Guinea since ExxonMobil’s PNG LNG commenced operations in 2014.
The PNG LNG liquefaction project is the only major LNG project currently operating on the island nation. Production started nine years ago and now routinely produces more than eight million tonnes a year of LNG, well above its 6.9 million
tonne nameplate design capacity.
The project is an integrated development that includes gas production and processing facilities that extend from Hela, Southern Highlands, Western, and Gulf provinces to Port Moresby in the Central Province.
Since beginning production, the project has continually supplied LNG to its four long-term major customers in the Asia region: Sinopec, Osaka Gas, Tokyo Electric, and CPC Corporation.
Exxon and its PNG LNG JV partners, including Santos Limited and PNG-owned Kumul Petroleum Holdings, started LNG production at the Angore project in Hela Province late last year. It represents a new source of natural gas that is expected to support stable, long-term production for PNG LNG.
The development is projected to deliver up to 350 thousand cubic feet of gas per day, via the trillion-cubic-feet natural gas resource.
Part of PNG LNG’s original development plan, Angore’s tie-in is the largest natural gas development currently underway in PNG. The project’s pipelines will leverage existing infrastructure by connecting to the Hides gas conditioning plant in the Hela Province. Alongside Angore, gas from the Agogo and Moran wells could contribute an additional 125 thousand cubic feet daily.
Exxon PNG Chairperson and Managing Director Tera Shandro said the projects would not only continue to elevate PNG as an LNG exporting nation, but also generate thousands of jobs and billions of kina in economic activity.
She said: “We are incredibly excited for LNG’s next decade and beyond in Papua New Guinea – the country’s LNG future looks bright.” A final investment decision on the projects is due by 2026.
Drilling is also underway at the Hides Footwall exploration well, which could add another 160 thousand cubic feet of gas per day. Earlier this year, Exxon confirmed high-quality, hydrocarbon-bearing reservoirs while drilling the onshore P’nyang South-2 well in the Western Province.
Exxon is fast-tracking the P’nyang gas field as part of its efforts to significantly expand its LNG portfolio to 40 million tonnes annually by 2030.
With 4.4 trillion cubic feet of gas, P’nyang will be crucial to advancing Papua New Guinea’s LNG industry and meeting projected increases in global demand for gas.
Exxon is working through the concept select phase and preparing to establish a project office in the Western Province. It undertook initial ground surveys earlier in the year.
A final investment decision for the project is not du until 2029, and the development is being synchronised with TotalEnergies’ Papua LNG start-up, currently scheduled for the same year.
However, if Papua LNG is delayed further, Exxon has said it may accelerate development to avoid supply gaps, but any problems could affect the entire industry.
PNG LNG’s operator is Exxon, which holds a 33.2 per cent interest. Santos is the majority holder with a 39.9 per cent interest and the remainder is held by Kumul Petroleum (19.4 per cent),
JX Nippon Oil & Gas Exploration (4.7 per cent), and Mineral Resources Development Company (MRDC, 2.8 per cent).
The Governor of PNG’s Western Province, Taboi Awi Yoto, recently urged PNG Prime Minister James Marape to start development within the province’s North Fly district.
He touched on Exxon’s P’nyang project, expressing concerns about the lack of progress since the agreement was signed, reminding the PM of the negotiated sunset clause, and emphasising that penalties should be imposed on ExxonMobil if milestones are not met.
Yoto said: “After we’ve signed the agreement, we have not seen any early works in Western Province.
“We would like to see our partners from Exxon coming in and starting the project – our people have waited too long.”
TOTAL AND TWINZA DEVELOPMENTS
Last year, a final investment decision on the $15-billion Papua LNG project was delayed until the end of 2025, after operator TotalEnergies said it needed to review its initial EPC bids to obtain commercially viable contracts.
The French multinational said in February that it was not expecting to receive the final tender offers until September, leaving the final investment decision to the final quarter of the year or early next year.
Papua LNG will consist of nine production wells, one injection well, one carbon dioxide reinjection well, a gas processing plant, and 320 kilometres of pipelines, including 60 kilometres onshore from the processing plant to the liquefaction plant in Caution Bay.
The project will also have an annual export volume capacity of 5.6 million tonnes of LNG.
Managed by Total, which owns a 37.55 per cent stake, the joint venture is also supported by partners ExxonMobil (37.04 per cent), Santos (22.83 per cent) and JX Nippon (2.58 per cent).
Total and its JV partner Exxon have said work towards a final investment decision continues amid the effort to reduce costs.
PNG’s government has indicated that once production at Papua LNG begins, it intends to start construction of ExxonMobil’s 4.4-trillion-cubic-foot P’nyang gas field. The intention is for the construction workforce from Papua LNG to move on to building P’nyang once the former is complete.
Alongside the larger multinational-led operations, Twinza Oil and MRDC are progressing the country’s first offshore oil and gas development, having obtained all internal approvals for the FEED-ready Pasca A development project in the Gulf of Papua.
The Pasca A field is fully appraised with four wells drilled, resources independently assessed by Gaffney, Cline & Associates, pre-FEED studies completed, and the project ready to enter FEED following approval of the Pasca gas agreement.
Stephen Quantrill, Executive Chairman and Managing Director at Twinza, said he was pleased to collaborate with MRDC in the development of PNG oil and gas assets, starting with Twinza’s fully appraised, ready-to-go Pasca A project.
He added: “Pasca A, when operational, is expected to generate more than 500 million kina per year to the PNG state, generate around 500 permanent jobs and bring significant US dollars of foreign currency into the PNG economy.”
