Exxon LNG Venture In PNG Sets Expansion Target
By Ross Kelly, 20 February 2012.
Of DOW JONES NEWSWIRES
SYDNEY (Dow Jones)--A US$15.7 billion energy venture in Papua New Guinea operated by ExxonMobil Corp. (XOM) may know by the end of the year if it has enough gas for an expansion that could vastly improve its profitability, project partner Oil Search said Tuesday.
PNG LNG is one of the largest and most complex energy projects under construction in the world. An expansion to three liquefied natural gas, or LNG, production units from the two currently planned could give a major boost to Oil Search, for whom the PNG LNG project is its flagship investment.
An expansion could also benefit the impoverished nation of Papua New Guinea, whose gross domestic product is already set to more than double if the project's foundation stage is completed in 2014 as planned [LNG Watch - define poverty! Most Papua New Guineans bitterly disagree with western indicators of wealth! And who will benefit from this economic growth principally? The company, its shareholders, a small national elite and their political patrons. The people of PNG will only 'own' the pollution, the landslides, the security problems].
Exxon, Oil Search and other partners including Australia's Santos Ltd. (STO.AU) already have enough gas to underpin construction of the foundation stage of PNG LNG, which will ship 6.6 million metric tons of liquefied natural gas from 2014 to customers in Japan, China and Taiwan.
As anticipated by some analysts, Oil Search said Tuesday that initial exploration drilling in the Hides area to support a possible expansion of the project has been pushed back until mid-2012--from an original timetable of the end of the first quarter.
"A preliminary view on whether enough gas is available to underwrite an expansion or whether additional activities are required is likely to be formed in late 2012/early 2013," Oil Search's Chief Executive Peter Botten said in a statement.
A well currently being drilled outside the Hides prospect, P'nyang, may also factor into the expansion effort, and work there will immediately be followed by exploration of a separate prospect, Trapia, Oil Search has said.
Oil Search also has extensive gas prospects in the Gulf of Papua, which it hopes will support construction of another gas-export venture later down the track. It intends to drill its first well there in the last quarter of 2012.
"Oil Search has received strong interest in participating in this programme from a number of major companies with LNG development experience," Botten said, without naming any companies.
The company Tuesday separately announced profit for the year to Dec.31, which it said climbed 9.1% to US$202.5 million from US$185.6 million, boosted by higher oil prices.
Excluding a previously announced US$33.2 million impairment charge on an oil block in Kurdistan, net profit rose to US$235.7 million from US$144.1 million, beating the US$228.4 million average of eight analyst forecasts compiled by Dow Jones Newswires.