CHEVRON PAPUA NEW GUINEA PROJECT OK'D

Dec. 17, 1990

Chevron Niugini Pty. Ltd. group's Kutubu oil development and export project in Papua New Guinea has won approval. It will mean the start-up of that nation's first crude exports in mid-1992. Plans call for production to peak at 128,000 b/d. The project's total cost is pegged at about $950 million, of which $730 million will have been spent before first oil is produced. The Kutubu area in the south central highlands provided Papua New Guinea its first commercial hydrocarbon

Chevron Niugini Pty. Ltd. group's Kutubu oil development and export project in Papua New Guinea has won approval.

It will mean the start-up of that nation's first crude exports in mid-1992.

Plans call for production to peak at 128,000 b/d. The project's total cost is pegged at about $950 million, of which $730 million will have been spent before first oil is produced.

The Kutubu area in the south central highlands provided Papua New Guinea its first commercial hydrocarbon discoveries (OGJ, Mar. 20, 1989, p. 21).

However, the first commercial development will be BP Petroleum Development Ltd.'s Hides gas development, approved this fall (OGJ, Oct. 9, p. 42).

APPROVAL DETAILS

Chevron and partners signed licenses PDL2 and PLL2 covering petroleum development and pipeline construction Dec. 10 in Port Moresby.

Chevron said the licenses, together with earlier approval of its environmental plan, land leases, and compensation agreements plus other legal instruments give the group approvals needed to proceed with construction.

Papua New Guinea's government has exercised its right to take a 22.5% carried interest in the project, initially based on production from lagifu-Hedinia, Usano, and Agogo oil and gas fields in the central highlands.

Both licenses are issued for an initial term of 25 years and are renewable for a second, 20 year term.

PROJECT DETAILS

Kutubu oil will be gathered from the three fields and moved to a processing plant near Lake Kutubu (OGJ, May 14, p. 25).

From there, the crude oil will move via a 270 km pipeline from the highlands to a loading buoy in the Gulf of Papua for delivery to export tankers.

Project operator Chevron estimates proven reserves at a minimum of 200 million bbl of light, sweet crude.

Kutubu joint venture partners are Chevron 19.375%, BP Petroleum Development Ltd. 19.375%, Ampol Exploration (PNG Petroleum) 16.456%, BHP Petroleum (PNG) Inc. 9.687%, Oil Search Ltd. 7.7763%, and Mitsubishi Industries 4.844%.

The Papua New Guinea government will take the remaining 22.5% interest.