PNG shapes up as major LNG exporter

Jakarta: Papua New Guinea aims to become an important liquefied natural gas exporter and to bring its first project, a $US10 billion ($NZ13 billion) liquefaction plant run by ExxonMobil, onstream by late 2013, Planning Minister Paul Tiensten said this month.
A final investment decision on the project with a capacity of 6.3 million tonnes per year would be taken in May 2009, but that there was plenty of gas to justify at least two LNG production lines, or trains, he said.
"Papua New Guinea is the ideal place to deliver such an LNG project with the first cargo in 2013," he said.
Papua New Guinea is an oil producer but does not yet export gas. Significant amounts of gas have been found in the country while looking for more oil. Now the search for more gas is on as LNG demand soars globally.
"These resources are good enough to underpin the development of two medium-sized gas trains," Tiensten said.
"Most of this is rich gas, producing large amounts of condensate which immensely enhances the profitability of the LNG project. . . As the game picks up, there are bound to be more gas discoveries to sustain a series of future trains."
The project is 34 per cent owned by Exxon Mobil and 30 per cent owned by Papua New Guinea's Oil Search Limited.
"Our view is that an LNG development currently offers the best opportunity to maximise value for all stakeholders from the commercialisation of Papua New Guinea's natural gas resource," Exxon Mobil said in a statement.
Originally the plan had been to pump the gas to nearby Australia by pipeline.
But growing global demand for LNG, especially in southeast Asia, combined with a big drop in output from Indonesia, has made LNG more attractive, Oil Search Ltd's gas strategy manager Ashok Jain said.
The gas finds in a country that could supply the biggest LNG markets of Japan, South Korea and North America has stoked LNG export interest in other companies, including InterOil - a publicly traded Canadian oil and gas company operating in Papua New Guinea and backed by Merrill Lynch of the United States.
"The key is that there is enough gas to support 10 trains," Phil Mulacek, the CEO of InterOil, said.
He said the InterOil project hoped to produce up to 10 million tonnes a year of LNG with two trains from the third quarter of 2012 at a cost of about $US7 billion.
"We have a closer gas supply, so we cut the infrastructure in half," he said.
He would not say where the gas would be sent but said that a nine-million tonne a year drop in exports from Japan's former big supplier, Indonesia, created a big opportunity for new exporters in the region.
"We are underpinned by Merrill Lynch but we do have north Asian discussions," he said.
Merrill Lynch will be the lead offtaker and will organise the shipping. [18/12/07]

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