Gas & petroleum
Credit: ExxonMobil
Part of the 700 km PNG LNG pipeline under construction in the Southern Highlands.
Leading national growth With its first LNG project under construction and other LNG discoveries showing potential, Papua New Guinea’s petroleum and gas sector is very much moving to the next level.
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NG is on the cusp of being remade socially and economically as the massive infrastructure necessary to exploit the country’s rich gas reserves are being put in place. The ExxonMobil-led PNG LNG project, the first of at least three potential developments, is now under construction and is likely to see a massive $A16.5 billion ($US17.32 billion) spent before it reaches completion, with a projected return of $A145.3 billion ($US152.5 billion) over 30 years from 2014.
‘We believed that there was one billion barrels of hydrocarbon potential in PNG … We were wrong. There is much more than this.’ PNG LNG project The magnitude of the PNG LNG project is remarkable. Gas will be extracted from the Hides and surrounding fields of the Southern Highlands, where it will be treated then pumped through mountainous terrain to a shore base at Kopi. Then, it will travel under sea to an LNG production and export facility near Port Moresby. The pipeline, which is now under construction, will have a total length of over 700 kilometres and is expected to deliver nine trillion cubic feet of gas over its lifetime. Fibreoptic communication lines along the pipeline are likely to be connected into PNG’s planned national broadband network (see page 32), improving communications in isolated areas. The project stakeholders are ExxonMobil (33.2%), Oil Search Ltd (29%), the PNG Government’s National Petroleum Company (16.6%— see box), Santos Ltd (13.5 %), Nippon Oil Exploration (4.7%), Mineral Resources Development Company (representing PNG landowners, 2.8%) and the PNG Government’s Petromin (0.2%). Work on the LNG processing and export plant 20 kilometres from Port Moresby began in April 2011. Esso Highlands Ltd, the Exxon Mobil subsidiary running the project, recently launched a training facility at
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Port Moresby to train 5000 Papua New Guineans for the construction phase of the project. Overall, the LNG project is expected to employ 12000 to 150000 people during construction, 30% of whom will be Papua New Guineans. Supply agreements have already been made with the Chinese Petroleum Corporation in Taiwan, Osaka Gas Company Limited and the Tokyo Electric Power Company Inc in Japan, and Unipec Asia Company Limited, a subsidiary of China Petroleum and Chemical Corporation (Sinopec).
Liquid Niugini Gas This is a joint venture between New York-listed InterOil and energy investor Pacific LNG Operations Ltd and has partnerships in place with Bechtel and ConcoPhillips for technical services in producing LNG. Smaller in scope than the PNG LNG project, it has permission from the national government to build a LNG plant expected to cost $US5 billion at Napa Napa near Port Moresby, where InterOil operates PNG’s only oil refinery. It is projected to produce four million tonnes of LNG annually from a single production train to be completed in 2015 with another production train to follow nine months later. Late in 2010, the consortium signed a $US472 million financing deal with Mitsui and has recently estimated its Elke/Antelope gas fields to be the largest reserve in Papua New Guinea at around 9 trillion cubic feet. The presence of oil in the deposits gives the group immediate revenues to help build the LNG trains. Overall development costs for the project are expected to be $US7 billion and gas will be piped 350 kilometres to the LNG production site. PNG’s oil and gas potential was highlighted by InterOil’s Chairman and Chief Executive Officer Phil Mulacek at the 2010 Papua New Guinea Mining and Petroleum Investment Conference. ‘We believed that there was one billion barrels of hydrocarbon potential in PNG,’ Mulacek told the conference. ‘We were wrong. There is much more than this.’