Oil Search backs ExxonMobil Papua New Guinea LNG project
Oil Search said it will focus on the LNG development in Papua New Guinea being led by ExxonMobil following the signing of a mutual agreement with BG not to extend the study of a potential rival project.
MELBOURNE, Oct. 23 -- Oil Search Ltd., Sydney, said it will focus on the LNG development in Papua New Guinea being led by ExxonMobil Australia Pty. Ltd. following the signing of a mutual agreement with British Gas not to extend the study of a potential rival project.
Although the study confirmed viability of the BG-Oil Search LNG project, the progress of the ExxonMobil plan along with uncertainties about gas resources convinced the two companies not to extend their memorandum of understanding, which expires at the end of the month.
Additionally, the newly elected Papua New Guinea government has reiterated support for the ExxonMobil project and expressed a desire for it to proceed in a timely fashion.
Negotiations between the various joint venture participants on unitization of fields and other commercial issues have advanced during the last 2 months. These activities, along with early front-end engineering and design work, are on track to be completed by early 2008, which will open the way for a decision to proceed with a FEED contract.
Assuming a positive decision, marketing activities for the Papua New Guinea LNG project are expected to start in earnest next year. Oil Search said the entry of Chinese buyers into the LNG market last month bodes well for the industry and suggests that demand and pricing will remain strong for the foreseeable future.
The ExxonMobil JV project centers around a $10 billion facility with either a single 5-6.5 million tonne/year train or two smaller 3.2 million tonne/year trains.