PNG Petroleum Projects
PETROLEUM IN PNG
Highlights of the Petroleum Sector
There is currently are record number (50) of Petroleum Prospecting Licences (PPLs) blanketing almost the entire onshore and offshore Papuan Basin and most of the North New Guinea Basin. Most of the tenements outside the Fold Belt are held by junior explorers and a number of these are actively seeking joint venture partners to meet their drilling commitments, a real challenge in the current economic climate. Some players have already achieved this objective - Papua Petroleum has joint ventured with Sasol Petroleum on its PPLs in the Western and Southern Highlands Provinces and Horizon Energy recently announced a deal with P3 Global Energy of Thailand on Petroleum Retention Licences 4 (Stanley discovery) and 5 (Elevala and Ketu discoveries). Unfortunately, whilst there is a record number of PPLs, the current and proposed level of drilling is very low.
There have been several notable exploration successes in the last two years although some of the drilling has been disappointing and very expensive. RiftOil made a gas discovery at PukPuk 1 in PPL 235 in Western Province, close to the Douglas gas field, an earlier discovery by Rift. These two fields are the only discoveries made in the foreland regime of the Papuan Basin for a considerable period. InterOil's exploration in the inland Gulf Province continues to bring success and the recent Antelope 1 is a major gas discovery in a reefal limestone with homogenous high porosity reservior characteristics. InterOil hopes to underwrite a second LNG development in PNG with these fields. Oil Search's Cobra 1 well in PPL 190 was the first discovery (gas/condensate/light oil) in the Fold Belt for a long time.
The LNG project proposal from the joint venture lead by ExxonMobil is the main story in the hydrocarbon sector. The Gas Agreement that outlines the fiscal terms and legal framework under which the project will operate was signed on the 22nd May, 2008. This agreement was the trigger for the Front End Engineering and Design (FEED) stage which is expected to be completed by about November when a final investment decision will be made. A final decision to go ahead is expected at the end of 2009 and despite the current financial crisis there is a great deal of optimism the project will proceed because of its many favourable attributes including robust economics, good access to markets, associated liquids production and strong political support. The securing of funds by the State for its equity capital, the progress made on securing debt equity funding for all the project developers, the recent completion of the Benefits Sharing Agreement in Kokopo and the announcement of large gas sales agreement to China and Japan further enhances this picture.
The LNG Project is already having a major impact on the country because of expanditure on FEED and prequalification processes for the major contracts and this will reach a new level in July when pre-construction works are ecpected to start.
It will be a great achievement for PNG to join the exclusive club of LNG producing nations and once a core plant is established additional trains can be readily added in the future.