The outstanding performance of the PNG LNG Project has established PNG as a reliable producer of high heating value gas that provides buyers with geographic diversification. PNG has substantial undeveloped gas resources, a stable fiscal regime, a supportive Government and world class operators, which, when combined with Oil Search’s 90 years of in-country experience, create an ideal environment for new LNG capacity.
Material progress made on development of new LNG capacity
During 2018, significant progress was made towards the development of additional LNG capacity in PNG, underpinned by gas resources from the Elk-Antelope fields (PRL 15) in the Onshore Gulf and the PNG LNG Project and P’nyang fields (PRL 3) in the North-West Highlands. Broad alignment was reached on the preferred downstream development concept, which comprises three trains with a total capacity of 8 MTPA, to be located at, and integrated with, the existing PNG LNG plant. Discussions on commercial arrangements to enable the integration of the Papua LNG Project (Elk-Antelope) with PNG LNG, pre‑Front End and Engineering Design (FEED) downstream studies, upstream pre-FEED work on Elk-Antelope, project financing and LNG marketing also progressed. In November, a Memorandum of Understanding between the PNG Government and the PRL 15 joint venture was signed, outlining the key terms and conditions of the PRL 15 Gas Agreement. The Gas Agreement is targeted to be finalised by the end of March 2019, with a PRL 3 Gas Agreement expected to be completed shortly thereafter, allowing aligned FEED entry decisions to be made on the three LNG trains and the Papua upstream development in 2019.