Petronet sniffing around PNG LNG projects in earnest

When discussing possible partners for InterOil’s LNG project, we invariably thought of Korea and Japan (the regio’s big LNG importers), sometimes China (for its rapidly growing energy needs and pollution problem), but there is a new kid on the block. We already mentioned it, here some more.

India to join LNG party

  • INDIA’S largest liquefied natural gas importer and joint venture is reportedly moving to participate in explored gas blocks within Papua New Guinea as well as considering its own LNG plant.
  • Petronet LNG has been actively seeking LNG or gas assets around the world and has already been linked to sourcing supply from the upcoming ExxonMobil-led $US11 billion (K27.80 billion) PNG LNG project which is targeting first cargoes in late 2013 to early 2014.
  • Petronet is reportedly in talks with three operators in PNG for five explored blocks that have gas resources and are spread over three basins.
  • While the names of the operators were not disclosed, sources said the international companies are from the United States, Australia and Canada.
  • Negotiations involve farm-in opportunities with the foreign stakeholders in the projects.
  • In yet another proposed LNG plant for PNG, sources said Petronet would look into a five million tonne a year liquefaction facility as the company’s key intention is to export gas to India.
  • This development is outside of the 3.5MMtpa of LNG that Petronet seeks to get from PNG.
  • Petronet has a LNG receiving and re-gasification terminal capable of 5MMtpa at Dahej in the state of Gujarat in western India, and is building a 2.5MMtpa terminal at Kochi in the state of Kerala.
  • PNG LNG is the only such project to have received a gas agreement with the National Government and is in the front-end engineering and design phase with a final investment decision to be made late next year.
  • The joint venture is proposing to build a two-train 6.3MMtpa plant, but a third 3.15MMtpa train is a possibility later on, due to the extent of Oil Search’s fields which will provide gas for the project.
  • Operator ExxonMobil has 41.6 per cent of the project while Oil Search has 34.1 per cent, Santos 17.7 per cent, AGL Energy 3.6 per cent and Nippon Oil 1.8 per cent. Landowner interests hold the remaining 1.2 per cent.
  • AGL, Australia’s largest power and gas retailer, has just offloaded its PNG assets to a mystery buyer for $1.1 billion.
  • These interests are subject to change once the PNG Government steps on board the project (19.4 per cent) and the gas interests have been fully calculated.
  • A rival LNG project is Liquid Niugini Gas, a joint venture one-third owned by InterOil, Merrill Lynch and Clarion Finanz, with the latter holding its interest through subsidiary Pacific LNG.
  • The $US5-7 billion project is looking at a similar late 2013, early 2014 deadline, and the JV would ideally like a two-train plant capable of producing up to nine million tonnes of gas a year.
  • InterOil is drilling the Antelope-1 appraisal well in Gulf Province with the Antelope structure providing the impressive 105 million cubic feet gas flow rate from the company’s nearby Elk-4 well back in early September.
  • Should Antelope-1 be a success, InterOil is confident of having enough gas resource from its Elk and Antelope structures to underpin the two trains for Liquid Niugini Gas.
  • Recently, Italian oil major Eni SpA chief executive Paolo Scaroni said as many as four LNG terminals could be built in the country under a long-term partnership agreement made with the PNG Government three weeks ago.
  • Perth-based LNG Limited has long ago announced, but not committed to, an LNG plant either on or offshore in PNG, while Rift Oil signed a heads of agreement with Flex LNG in September to jointly develop and market Rift’s onshore PNG gas reserves using a floating liquefaction unit.

We argued this case many times on these pages, there is plenty of demand for LNG, demand is actually set to double by 2015, and supply is scrambling to keep up.

2 thoughts on “Petronet sniffing around PNG LNG projects in earnest”

  1. Next a verification of assets/ wait for kick from Antelope 1. Farm-in announced after… Short squeeze coming. Our turn finally!!

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