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I would appear the Citi OSH report supports my viewpoint regarding expansion costs with EA Gas:
"PNG gas cost curve supports expansion from Hides/P'nyang/Antelope only — Based on our benchmarking analysis, we have defined a cost curve for known gas resources in PNG under various development scenarios (backfill/expansion), which we compare to the price an LNG project could pay for gas. While Hides & a 2 train Antelope could provide an attractive development, particularly when combined with T3 cost synergies, we think most other gas resources are less attractive and would be marginal if developed to underpin expansion trains.
While economics underpinned by 2P, expansion needs 1P — ExxonMobil has historically marketed offtake on a 1P reserves basis to maximizes the value of the molecules. LNG expansion is likely to hence need 3-4tcf of incremental 1P reserves per train, thus we expect Train 3 sanction will require both Hides GWC upside and P’nyang. Beyond these resources (ex Antelope), we think other resources are marginal to develop as expansion (T4), though could be developed as backfill gas."
As far as O'neill comments are concerned, I am just reading into what he says. Why do you think Hession took the Total deal? Because it was better than what Exxon was offering. it preserved the upside. Why did he get out of negotiations with Exxon? Because they had no leverage. They do now, and Total doesn't have to build an LNG plant. They can partner with XOM/OSH on the PNG/LNG project along with IOC. If it is a win, win why not? And yes, it is speculation. This entire message board is speculation. That is what we are left with right now in a news vacuum.
Good luck longs
Jdeo
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No, CITI is not supporting your viewpoint.
This is a CITI research on OSH.
OSH has ownership in 2 trains of PNG LNG and a JV stake for greenfield Antelope LNG.
The report assumes T3 PNG LNG expansion fed by PNG LNG JV gas AND a 2 train Antelope Project fed by E/A gas, both which OSH will have ownership. CITI analyzes gas costs and CAPEX for LNG expansion and Antelope LNG and how those 2 projects impact OSH as an investment stock.
This report concludes that the only current gas stock in PNG attractive for LNG development are Hides and Antelope.
CITI is not declaring or implying in this report that E/A gas will feed PNG LNG.
We do know XOM/IOC lash-up is a possibility. CITI is not addressing this possibility in the report.