Exxon acknowledged today for the first time since exclusivity in its negotiations with InterOil lapsed that it "continues to assess and advance new expansion and development opportunities in PNG", indicating that the supermajor believes its negotiations with InterOil are proceeding well towards closure. This is a very encouraging sign and implies not only that the market's fears around exclusivity expiring were unjustified but also that the negotiations with InterOil have advanced further since Exxon's quarterly conference call last month. Here is a link to the rigzone article (http://www.rigzone.com/news/oil_gas/a/128778/PNG_LNG_Project_Over_90_Complete_First_Gas_Expected_in_2H_2014) from which the above quote was extracted, and below is the more comprehensive PNG Industry News coverage of Exxon's focus on the expansion of PNG LNG and its negotiations with InterOil. It seems that Dr. Hession's methodical approach to the negotiations is about to pay off tremendously for InterOil shareholders.
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Monday, 2 September 2013
EXXONMOBIL is eyeing “expansion” opportunities in Papua New Guinea as commissioning work starts at the PNG LNG project, which is more than 90% complete and on track for first exports in the second half of 2014.
“Antonov cargo aircraft operations into Komo airfield were completed on 13 August 2013 and installation of equipment delivered from Komo to the Hides gas conditioning plant is currently underway,” PNG LNG project executive Decie Autin said.
“We have started the commissioning phase at the LNG plant in preparation for the first LNG production in 2014. This includes sending gas from Oil Search’s Kutubu central processing facility to the LNG plant to provide power and enable testing and commissioning of key facilities and equipment.
“Drilling at wellpad B is complete and the drilling rig is being moved to the next wellpad to support further drilling activity.”
While the exclusivity arrangements have recently lapsed, ExxonMobil has been negotiating for a 4.6 trillion cubic feet of gas-sized stake of InterOil’s Elk-Antelope discoveries in PNG’s Gulf Province to underpin a third train expansion of PNG LNG.
ExxonMobil’s PNG subsidiary Esso Highlands said it was continuing to assess and advance “new expansion and development opportunities in PNG”.
The major previously revealed there was enough space at the plant site to fit five trains.
Ten months ago the capital expenditure estimate for PNG LNG blew out by 21% to $US19 billion, with a weak US dollar playing a significant role.
With the US dollar gaining strength over recent months, Exxon confirmed that the $19 billion capex remains in place.
“The project has been able to maintain its schedule in PNG under unique and challenging circumstances,” Autin said.
“Our focus on disciplined project execution has allowed us to meet our scheduling commitments without further cost increases.”
Key PNG LNG partner Oil Search managing director Peter Botten said Esso Highlands should be commended for its continued delivery of the highly complex project.
“The commissioning phase of the project has recently commenced, with gas from the Kutubu field now being sent through the pipeline to the LNG plant near Port Moresby,” Botten said.
“This gas will be used to provide power to the LNG plant site and to test and commission new facilities and equipment at the site.
“While considerable work remains to be completed before first LNG sales, this is an important step for the project and I would like to congratulate Esso Highlands and all the Oil Search staff and contractors who have contributed to the start-up of commissioning gas.”
The two-train PNG LNG project will have 6.9 million tonnes per annum of capacity, with some analysts forecasting first exports to take place in the December quarter of 2014.
The PNG LNG consortium consists of ExxonMobil (33.2%), Oil Search (29%), state-owned National Petroleum Company of PNG (16.6%), Santos (13.5%), JX Nippon (4.7%), landowner interest manager Mineral Resources Development Company (2.8%) and state-owned Petromin (0.2%). |
