*  FEED studies for PNG LNG expansion trains were expected to begin in late 2013, though the source of expansion feedgas is still to be determined.  The potential inclusion of E/A gas to the project may change the scope of these provisions.

*  The lowest cost and simplest option for expansion trains is Hides field, part of PNG LNG project......BUT, (Hides) needs further appraisal to confirm reserves upside. (High cost Hides gas IS PNG LNG's best option UNTIL an IOC E/A deal is cut)

*  An alternative is the remote and higher-cost P'nyang field, which is NOT part of the PNG LNG project and needs a gas sales or unitisation agreement between partners

*  An IOC/XOM tie up would introduce a third supply option for train#3, or allow an accelerated timetable for train#4

*  Economics of scale could be achieved by buiding trains #3 and #4 concurrently, while E/A deal would delay the need for further high cost exploration to find gas for those trains.

*  Exploration wells in the highlands of PNG are amongst the most expensive onshore wells in the world at upwatds of $100 million.

*  XOM has a number of options to bring E/A gas into PNG LNG, these include:

   1)  Revised unitisation agreement with XOM increasing it's interest in the project

   2)  Existing unitisation extended to cover E/A, with the partners reimbursing XOM

   3)  Tolling agreement, where XOM pays a fee to liquefy E/A gas through PNG LNG

*  These options would allow all partners to benefit from expanding the existing project.  However, the level of reward available may depend on each partner's ability to commit to the sizeable investment required to expand the project.

*  PNG LNG expansion appears to be XOM highest LNG priority.  Perhaps more than Gorgon expansion, Scarborough FLNG, NA shale plays, far eastern Russia and East Africa