PAPUA New Guinea aims to become an important liquefied natural gas (LNG) exporter by bringing its first project – a US$10 billion (K29.2 billion) liquefaction plant run by ExxonMobil – on stream by late 2013, Planning Minister Paul Tiensten said.
A final investment decision on the project with a capacity of 6.3 million tonnes per year will be taken in May 2009.
“There is plenty of gas to justify at least two LNG production lines, or trains,” he said recently at a conference in Rome.
“Papua New Guinea is the ideal place to deliver such an LNG project with the first cargo in 2013,” Mr Tiensten said.
PNG is an oil producer but does not yet export gas. Significant amounts of gas has been found in the country while looking for more oil.
Now the search for more gas is on as LNG demand soars globally.
“These resources are good enough to underpin the development of two medium-sized gas trains,” Mr Tiensten said.
“Most of this is rich gas, producing large amounts of condensate which immensely enhances the profitability of the LNG project.”
The project is 34%-owned by ExxonMobil and 30%-owned by PNG’s Oil Search Ltd.
“Our view is that an LNG development currently offers the best opportunity to maximise value for all stakeholders from the commercialisation of PNG’s natural gas resource,” ExxonMobil said in a statement.
Originally, the plan had been to pump the gas to nearby Australia by pipeline.
But growing global demand for LNG, especially in Southeast Asia, combined with a big drop in output from Indonesia, has made LNG more attractive, Oil Search Ltd’s gas strategy manager Ashok Jain told Reuters on the sidelines of the conference.
The gas finds in a country that could supply the biggest LNG markets of Japan, South Korea and North America had stoked LNG export interest in other companies, including InterOil, a publicly-traded Canadian oil and gas company operating in PNG and backed by Merrill Lynch of the US.
“The key is that there is enough gas to support 10 trains,” Phil Mulacek, the CEO of InterOil, told Reuters.
He said the InterOil project hoped to produce up to 10 million tonnes a year of LNG with two trains from the third quarter of 2012 at a cost of about US$7 billion (K20.5 billion).