ASX-listed Horizon Oil is keeping a close eye on negotiations over third-party access to PNG LNG project infrastructure as it progresses its own Western LNG project.

The company told shareholders in late October that the planned pipeline route from P’nyang to the PNG LNG facilities passes within 20 kilometres of the Ketu field, part of its Western LNG project planning.

“Recent announcements by the Government of Papua New Guinea indicate that its proposed Gas Policy would require third party access on reasonable commercial terms to pipelines and a recent media report suggests that such arrangements may be the subject of negotiation for the PNG LNG project agreement,” Horizon’s CEO, Michael Sheridan said.

The condensate rich gas resources in the Stanley, Elevala, Ketu and Ubuntu fields lie to the south of ExxonMobil and Oil Search’s P’nyang gas field which will provide the threshold volumes for expansion train 3 of the PNG LNG scheme.

However, he also said that Horizon will continue to look at other development opportunities.

“While such a potential commercialisation pathway may provide a beneficial opportunity, it remains appropriate for Horizon Oil and its fellow joint venturers to progress their independent development plans for their resources by way of the Western LNG project and the re-emerging opportunity for the Stanley condensate recovery project to provide nearer term condensate and domestic gas revenue, while planning for, and construction of, the longer-dated Western LNG project take place.”

Mr Sheridan told shareholders that Horizon Oil had made further progress on its planning for the commercialisation of the gross appraised resource of 2,200 PJ of sales gas and 64 million barrels of associated condensate in the four petroleum licences in the foreland basin of Western province that are intended to supply gas to the Western LNG project.

The company holds approximately 30% of the resource and is operator of two licences constituting the majority of the resource.

Discussing the recent notices of intent from the PNG Government to cancel key Western licences PDL-10 and PL -0 and the notice to terminate the Stanley Gas Agreement, Mr Sheridan said PDL-10 operator Repsol, remains of the view that the notices are without merit and are procedurally invalid.

“Based on external legal advice, Horizon Oil supports this view. Horizon Oil and the PDL-10 joint venture continue to work with the PNG Petroleum Minister and the Department of Petroleum and Energy to resolve any misunderstanding or disagreement with respect to the good standing of PDL-10, PL-10 and the Stanley Gas Agreement,” Mr Sheridan said.