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Maintenance shutdown reduces PNG’s oil output

By BRIAN GOMEZ in Sydney
A 10-day planned maintenance shutdown at Kutubu and the Agogo production facility has caused PNG’s oil production to fall by 13% in the March quarter, with Oil Search oil revenue down 33% to US$115.1 million (K360 million).
In its report for the March quarter, Oil Search said yesterday its oil production had averaged 45,096bpd during the March quarter, but that it had since recovered to just below 50,000bpd.
Oil Search managing director Peter Botten said production should be maintained at around this level for the remainder of the year, and together with anticipated production from Egypt late this year, should maintain overall output at 10.5 million to 11 million barrels oil equivalent.
Mr Botten said an underlift of 300,000 barrels of crude oil during the period with the larger inventory being unwound during the remainder of the year.
Oil Search share of total output will be 2.29 million barrels oil equivalent.
The average price of PNG crude rose by 6% to US$65.02 a barrel with Kutubu crude continuing to enjoy a premium over Malaysia’s marker Tapis crude.
Mr Botten said the planned maintenance shutdown “was carried out efficiently and without any safety incidents, and would considerably improve plant reliability going forward”.
Production was also affected by a standstill at the North West Moran operation, where output fell from 96,000 barrels last March quarter to zero in the latest quarter due to ongoing negotiations on landowner royalties.
Mr Botten said the key development during the quarter was the decision to suspend work on the gas pipeline project and to focus on other projects such as LNG and petrochemical.
“Given the time and effort the company had invested into the project over a number of years, this was a very difficult decision to make.
“However, the reasons were compelling: the studies completed in January clearly demonstrated that the potential returns available on LNG and petrochemical are far superior to the PNG Gas Project.”