Total hails Oil Search as perfect PNG partner

[Tusker]

The government is the common owner and  rainmaker that will bring all together and the gas down to PNG LNG.

Maybe when that happens they will have a joint announcement celebration and Oneill, Hession, Botten, The Walrus and Rex will each have a stack of Kina and "make it rain" in the swimming pool for all to see!

Maybe when we have two giants and two juniors in the same dance hall, who know each others contours... the mention of a "Gas Hub" in the stratigic proximity of the Asian Century is a plausable possibliliy.  Wonder if that emerging PNG soveregn wealth fund would like some XOM & TOT stock also.

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[Palm]

Palm, ALL of this is obviously of great interest, but it does not seem appropriate to me to be underlining the last unattributed statement by the author of the article, with the resulting de-emphasis of the actual statements and quote from Total: 'Total would not comment on whether it was open to processing the gas at PNG LNG. "Our acquisition of those significant discovered resources is an opportunity to develop a new gas production and liquefaction hub in the Asia-Pacific region, where gas demand is very dynamic," the spokesman said.' We have indication from elsewhere that Hession and Total have expressed an intent to appropriately modify the SPA and proceed as previously planned with respect to PRL 15. What concrete reason is there to believe that they are likely to change direction and sell that gas to PNG LNG? Why would the PNG government not want to have Total proceed to build a second LNG project as soon as possible, with potential for expansion of TWO projects from additional PNG gas?

Getirt2, remind yourself of recent events, ownership structures, timelines  -  and please think long and hard before asking these kinds of questions..

Getit,

I echo the good Doctor's thoughts and have to ask, What is it that you seem to see as such a negative point to sending gas to PNG LNG?  And if you do not see it as negative, why are you so averse to the thought that this could happen?  Low investment, quicker cash flow with probable ownership in those PNG LNG expansion trains can only be a good thing, correct?  Then with furrher gas proven up the idea of a new LNG plant only gets better it seems.  Again, knowing that they ultimately will choose the quicker and more economical route, and if the first stop on that "line" is gas to PNG LNG, why would that be such a train wreck that you seem to fear?

[Kaliboo]

A review of OSH presentations shows that Total and OSH are and have been partners (OSH as operator) on many wells/leases in Png. So it doesn't strike it as a surprise that Total would view this deal at E/A as a positive.  OSH have been punching holes and sidetracks at a fast rate in PNG.  Coupling their geologic knowledge with IOCs will create a tremendous subsurface synergy that should shift the Ps curve significantly upward and accelerate the overall development of PNG resources.  If it can be agreed by all parties the maximum profit is to max out the XOM PNG LNG plant to 8 trains and then build the 2nd plant.  This means XOM has to get a nice piece of the leases.  Can all parties agree to such a grand deal?  Time will tell.

[ArtM72]

Getit,

I echo the good Doctor's thoughts and have to ask, What is it that you seem to see as such a negative point to sending gas to PNG LNG?  And if you do not see it as negative, why are you so averse to the thought that this could happen?  Low investment, quicker cash flow with probable ownership in those PNG LNG expansion trains can only be a good thing, correct?  Then with furrher gas proven up the idea of a new LNG plant only gets better it seems.  Again, knowing that they ultimately will choose the quicker and more economical route, and if the first stop on that "line" is gas to PNG LNG, why would that be such a train wreck that you seem to fear?

I can't answer for Getit but I believe I have some of the same views.  I am not against sending E/A gas to PNG LNG.  I have in fact argued for years that was the most economical and logical choice for first gas, especially after it became widely recognized the current pipe had a tee and could transport 3 trains.  What I want to remind everyone jumping on the PNG LNG bandwagon is:

1.  There are strong political interests in Gulf Province that have for some time been demanding to have the LNG plant built in their province.  What is the price of domestic peace in the construction of these facilities?  What is the cost of widespread disfavor and resentment?  Lord knows that while XOM had peace in Port Moresby building the LNG plant they had their hands full with the locals out in the Highlands.

2.  XOM and its partners evidently have been not all that keen on sharing ownership of their facility as evidenced by months of exclusive negotiations leading to nothing.  There is the possibility IOC and XOM got close, only to have their plans rejected by the government.  Sure, Duma is gone, but that doesn't mean issues he was fomenting have disappeared.

3.  Some may believe that two separate facilities provide greater reliability than a single facility.  Any local disruption could certainly cut production, but with two plants the chance of losing all of the country's production should be considerably less.  I also suspect should truly major new reserves be located expansion at two different locations likely would go much more quickly.

For these reasons I question whether anyone should believe it should be a slam dunk that E/A's first allocation will go to PM.  Total's statement couldn't have been more clear: they aren't rule anything out at this time.

[Brew Swillis]

I can't answer for Getit but I believe I have some of the same views.  I am not against sending E/A gas to PNG LNG.  I have in fact argued for years that was the most economical and logical choice for first gas, especially after it became widely recognized the current pipe had a tee and could transport 3 trains.  What I want to remind everyone jumping on the PNG LNG bandwagon is:

1.  There are strong political interests in Gulf Province that have for some time been demanding to have the LNG plant built in their province.  What is the price of domestic peace in the construction of these facilities?  What is the cost of widespread disfavor and resentment?  Lord knows that while XOM had peace in Port Moresby building the LNG plant they had their hands full with the locals out in the Highlands.

2.  XOM and its partners evidently have been not all that keen on sharing ownership of their facility as evidenced by months of exclusive negotiations leading to nothing.  There is the possibility IOC and XOM got close, only to have their plans rejected by the government.  Sure, Duma is gone, but that doesn't mean issues he was fomenting have disappeared.

3.  Some may believe that two separate facilities provide greater reliability than a single facility.  Any local disruption could certainly cut production, but with two plants the chance of losing all of the country's production should be considerably less.  I also suspect should truly major new reserves be located expansion at two different locations likely would go much more quickly.

For these reasons I question whether anyone should believe it should be a slam dunk that E/A's first allocation will go to PM.  Total's statement couldn't have been more clear: they aren't rule anything out at this time.

Gulf will get what they want but the timing will be dictated by what is best for the country.  PNG does not want idle workers, they want to keep skilled labor on-island, employed and pumping money into the economy.  So much infrastructure is needed that constructing Gulf LNG is years away, construction of more trains at PNG LNG could begin in months, perhaps weeks.

[Palm]

Agree Brews; Gulf already has plenty of spending on projects planned: 1. New Port at Paia inlet- Huge project that will spawn more than Kavo can keep track of 2. New roads to connect tThe Highlands to Kerema and PM 3. Pipelines, CSPs and other surrounding the combining OSH/Total/IOC license areas The National government owns the resources and will have the say in how they get developed. The fact that they have endorsed the OSH Pac LNG buy AND bought into OSH says a lot, and supports their statement that they support OSH's overall aggregation plan to bring hydro resources together to monetize them in the quickest and least costly manner. No one is saying anything is a slam dunk nor that "first" gas from EA will be going to PNG LNG. But if we all believe in the IOC resource the way it has been said so many times, then there will be plenty of gas for expansion of PNG LNG and new plant(s). The government will push things the way it works best for the country. These bigs work together around the world. In that last couple of years Total and Exxon have partnered together in places like South Sudan, UK (South Hok) and Poland; no reason it can't be done in PNG if that's the best way to get things done.

[sydbod]

A link from a slightly earlier article that is not behind a pay wall, for those that are interested. (apologies if that link was provided elsewhere on the site)
http://www.theaustralian.com.au/business...6841384789#

[jft310]

Some failed to read this article and should . Total closes then the monetization takes place.