BUSINESS Monitor International (BMI) has painted an upbeat picture for Papua New Guinea’s gas industry despite production from the Elk/Antelope deposits not being expected until about 2017.
While the first liquefied natural gas deliveries from PNG LNG are scheduled in the second-half of 2014, BMI noted in its PNG Q2 oil and gas report that there continued to be new proposals for LNG exports.
The main trends and developments BMI highlighted for PNG’s oil and gas sector was movement on the long-stalled, InterOil-led LNG project.
In December, French major Total farmed-in to the PRL 15 licence containing the Elk/Antelope complex with a 61.3 per cent interest, dashing speculation ExxonMobil was set to gain a holding in the gas fields.
“As a result of the Total deal with InterOil we have altered our forecasts for PNG’s gas production,” BMI said.
“The new agreement has delayed both the expected addition of gas to supply a third train at ExxonMobil’s PNG LNG facility and also postponed production from the Elk/Antelope complex until around 2020, by which time a second standalone LNG export terminal could be operational.
“Overall, our view remains largely optimistic on PNG’s gas sector, which we expect will expand beyond the initial two trains due online from the ExxonMobil-led PNG LNG project in 2014.”
BMI pointed out that first gas from the project could treble PNG’s exports and boost its gross domestic product by at least 20 per cent.
“Due to new LNG export facilities, we anticipate production to grow from 0.1 billion cubic metres in 2013 to 14.8bcm by 2018,” the report said.
Meanwhile, Oil Search’s Hides, Angore and Juha fields are due to begin supplying ExxonMobil’s PNG LNG project from mid-2014 when the facility is due to come online.
“We now believe further expansion of this project will be underpinned by resources from the P’nyang field, while more exploration of the Juha North area and to the south of the P’nyang field could also add to output.”
Due to the work still required to appraise and develop these fields, BMI has factored in possible production start-up for 2017.
While PNG’s gas industry is tipped for further expansion, BMI has painted a weaker long-term outlook for oil production.
“Some upside comes from condensate production as part of the PNG LNG project as well as from the Mananda discovery and Stanley condensate project, but falling output elsewhere will make the recovery in volumes only a temporary development,” BMI said.
Given PNG remained strategically located for exports to Asia and currently benefits from significantly lower development costs than projects in nearby Australia, the overall situation was definitely positive.
“This should help make PNG gas competitive, even as competition from new projects in East Africa, Russia and the US increases,” BMI said.