Are there any clues from Oneill?

[cybersssss]

Perhaps total would prefer Exxon buy ioc and they can participate in pnglng. The capex for them will be a lot lower and they essentially come along for the ride. Will be a huge victory for them to their shareholders.

[jdeo1969]

I had forgotten that the XOM shares (after a buyout of IOC) could combine with OSH and become the majority E/A owner.  This has to make TOT concerned.  Unless they just didn't see this scenario as a possibility, it makes me wonder even more why IOC (or even TOT) didn't do whatever it took to outbid OSH.

Perhaps total would prefer Exxon buy ioc and they can participate in pnglng. The capex for them will be a lot lower and they essentially come along for the ride. Will be a huge victory for them to their shareholders.

Cyber may have just answered your question CAC.  It seems highly unlikely they would not foresee even the possibility.

I had forgotten that the XOM shares (after a buyout of IOC) could combine with OSH and become the majority E/A owner.  This has to make TOT concerned.  Unless they just didn't see this scenario as a possibility, it makes me wonder even more why IOC (or even TOT) didn't do whatever it took to outbid OSH.  

[ArtM72]

The biggest downside for IOC with OSH control wouldn't be the deal they get from XOM for PRL15. OSH has to match TOT terms. The downside would be what kind of price IOC would get from XOM on subsequent gas discoveries. XOM would be free to low ball future gas prices if those discoveries are not large enough to justify a competitive greenfield plant.

Maybe the way to look at this is quite simple. PNG's long term best interest is its gas being processed in the Gulf simply because it gets a bigger cut. Recall PNG gets only 16.8% with its participation in PNG LNG.

I'm still not sure OSH has enough gas today for two full trains.

[jdeo1969]

Art, good points, but my contention is that politicians want fast results because it is in their best interests. while I firmly believe O'Neill has pngs best interests at heart, as I have gone through many many of his interviews, I also believe he wants fast results for the economy for both reasons. Gas going to the xom plant is fastest. That is the root if my thread as it relates to O'Neill.

[admin]

Art, good points, but my contention is that politicians want fast results because it is in their best interests. while I firmly believe O'Neill has pngs best interests at heart, as I have gone through many many of his interviews, I also believe he wants fast results for the economy for both reasons. Gas going to the xom plant is fastest. That is the root if my thread as it relates to O'Neill.

Thanks for all the work jdeo. I'm not sure there is a clearcut advantage for PNG one way or another though:

• Yes, third train PNG LNG offers a faster route
• But it also makes Exxon very dominant, there were worries already when IOC was in exclusivity negotiations (Duma!)
• Gulf is counting on serious development
• Second LNG will offer more jobs

[Thylacine-2]

I remember Hession's statements that he was spending so much time(half?)in PNG talking with government officials, and that we are guests in the country. One thing that we can be sure of is that he is very familiar with PNG views and places a high priority on working closely with the government. We are speculating about Oneill's views on all this but Hession knows.

[jdeo1969]

Art, good points, but my contention is that politicians want fast results because it is in their best interests. while I firmly believe O'Neill has pngs best interests at heart, as I have gone through many many of his interviews, I also believe he wants fast results for the economy for both reasons. Gas going to the xom plant is fastest. That is the root if my thread as it relates to O'Neill.

Thanks for all the work jdeo. I'm not sure there is a clearcut advantage for PNG one way or another though:

• Yes, third train PNG LNG offers a faster route
• But it also makes Exxon very dominant, there were worries already when IOC was in exclusivity negotiations (Duma!)
• Gulf is counting on serious development
• Second LNG will offer more jobs

If IOC proves up what we are all hopeful they prove up, there will be plenty of gas for both.  That point has been made time and again here and I concur.   The second LNG would certainly offer more jobs, I just wonder if Oneill's immediate concern is showing his constituents the balance sheet in the near term with our gas going to XOM.  That would be considered a win for him politically, then he can tackle the second LNG project for employment et al down the road.  Just my theory of where his plans may lie.  I just keep coming to the conclusion that he likes an IOC Exxon hookup for the existing project.  My hope is if that IS the case, he can be influental in helping IOC get it's desired equity stake for it's role and contirbution.

[Thylacine-2]

Art, good points, but my contention is that politicians want fast results because it is in their best interests. while I firmly believe O'Neill has pngs best interests at heart, as I have gone through many many of his interviews, I also believe he wants fast results for the economy for both reasons. Gas going to the xom plant is fastest. That is the root if my thread as it relates to O'Neill.

Thanks for all the work jdeo. I'm not sure there is a clearcut advantage for PNG one way or another though:

• Yes, third train PNG LNG offers a faster route
• But it also makes Exxon very dominant, there were worries already when IOC was in exclusivity negotiations (Duma!)
• Gulf is counting on serious development
• Second LNG will offer more jobs

If IOC proves up what we are all hopeful they prove up, there will be plenty of gas for both.  That point has been made time and again here and I concur.   The second LNG would certainly offer more jobs, I just wonder if Oneill's immediate concern is showing his constituents the balance sheet in the near term with our gas going to XOM.  That would be considered a win for him politically, then he can tackle the second LNG project for employment et al down the road.  Just my theory of where his plans may lie.  I just keep coming to the conclusion that he likes an IOC Exxon hookup for the existing project.  My hope is if that IS the case, he can be influental in helping IOC get it's desired equity stake for it's role and contirbution.

Good point Jdeo about employment down the road on a second project.  More trains at the Exxon project would provide jobs now.  But, like Admin said, it is important that Exxon not become too dominant.  Over the long haul PNG's interests will be best served by having multiple projects controlled by different companies.  Surely Oneill, skilled politician that he is, realizes that.

[Stavros]

I think everyone is missing the fact that XOM holds only a small plurality of PNG LNG ownership. Other major shareholders are, as we all know, Oil Search, Santos and PNG government itself.

XOM happens to be the Partner responsible to manage construction of the comPlex and then operate it.

OSH, as I understand it, is in control of the upstream gas gathering.

XOM by no means whatsoever would have a monopoly in PNG. Duma's statements about this being the case were surely motivated by extenuating circumstances if you catch my drift.

Ownership of Train 3 and beyond can be made up of any combination (or exclusion) of the current Partners plus IOC and even TOT.

[jft310]

Another interesting point is the one who makes the train possible, the one who provides the gas gets a nice slice of the LNG pie ownership. And they get paid for their gas. In the PNGLNG project OSH received 29%, In the Total deal per Hession IOC was slated to receive 30% of the LNG ownership. IOC now has partners that's true. To think they would get 30 percent can not be reality. But a meaningful percent would make sense. That exact percentage may be what these soon to come talks will be all about.