By PETER ESILA
KUMUL Petroleum Holdings Ltd (KPHL) managing director Wapu Sonk says if formalised the Papua LNG and P’nyang projects should be able to meet the LNG demand window from 2026 to 2028.
He told The National yesterday that the LNG spot prices had recovered a bit from US$2.4/MMbtu (million (106) British thermal units) few months back to now around US$4.50/MMbtu.
Oil Search Ltd in its third quarterly report stated that discussions on LNG expansions were continuing between the P’nyang operator ExxonMobil and the PNG Government with the objective of securing fair and balanced fiscal terms on the P’nyang Gas Agreement.
Internal analysis carried out by Oil Search during the quarter, utilising independent data and discussions with potential customers, assessed the impact of the Covid-19 on future LNG demand, resulting in a view that the supply gap anticipated for the mid-2020s had been deferred by a few years.
“The LNG projects have been delayed already due to low demand caused by the Covid-19,” Sonk said.
“If the PNG projects (Papua LNG and P’nyang) enter front end engineering design (Feed) in 2021, final investment decision in 2022 and start constructions in 2023, we should be able to meet the demand gap or window from 2026 to 2028.”
“The demand window could move forward as well if current projects in operations don’t do well or projects under constructions now get delayed.
“Papua LNG Project, which has a signed gas agreement, needs to enter Feed early next year if we have to meet the LNG demand window.
“The P’nyang project can come behind that as it does not have a gas agreement yet, hence decoupling the Papua LNG from P’nyang or PNG LNG Project expansion train is key to getting Papua LNG going as soon as possible.”
The KPHL is the country’s national oil and gas company and is responsible for managing the State’s 16.57 per cent equity in the ExxonMobil operated US$19 billion (K64.91 billion) PNG LNG project – becoming the third largest partner in the largest single investment made by the country to date.
By PETER ESILA