Exxon prefers PNG to Australia

 PAPUA New Guinea is an attractive investment destination compared with Australia, which has high labour costs and low productivity, Exxon’s Middle East and Australian vice president Mark Nolan says.

He told reporters in Brisbane on Monday that ExxonMobil prefers to use natural gas fields in PNG owned by InterOil to expand the country’s US$19 billion PNG LNG gas export project, rather than build a second export facility.

Last week, Exxon began talks with InterOil to invest in the latter’s gas assets in PNG. 

However, it did not specify at the time whether the assets would underpin a new LNG plant, or support an expansion of the gas project that was already under construction.

He said: “We are interested in it because it could potentially provide an expansion of our existing facility.” 

The PNG LNG project, which counts Oil Search Ltd and Santos Ltd as shareholders, is currently being built with two gas processing units, known as trains. 

Exxon and partners have already found more resources in PNG that could underpin an expansion of the project to three trains, including the recent P’nyang discovery.

Exxon has estimated that it would need another four trillion or five trillion cubic feet (tcf) of natural gas to add another train to PNG LNG.

“The resource will determine the size of the project, and, at the end of the day, the market will as well,” Nolan said.

Meanwhile, ExxonMobil in PNG told The National yesterday the agreement on Gulf LNG project remained unclear as it was in initial stages.

“It is too early to see, we have only just begun exclusive negotiations with InterOil last week so the finer details on the agreement have not yet been confirmed,“ the company spokesperson said. 

Meanwhile, Prime Minister Peter O’Neill has welcomed decision by InterOil last week to start talks with ExxonMobil as a potential partner to develop its Elk and Antelope gas reservoirs.