"We declare our first goal to be for every person to be dynamically involved in the process of freeing himself or herself from every form of domination or oppression so that each man or woman will have the opportunity to develop as a whole person in relationship with others".

- Papua New Guinea National Goals and Directive Principles

Tuesday, 21 October 2014

Japan continues LNG trend

Japan's imports of LNG remained at a near-record average of 11.85 billion ft3/d in the first eight months of 2014, according to recently released trade statistics from Japan's Ministry of Finance. Increased LNG imports are occurring amid continued shutdowns of nuclear power plants following the Fukushima meltdown and subsequent increased use of fossil fuels in power generation. Higher levels of LNG imports in 2014 are underpinned by continuous growth in gas-fired power generation, the ready availability of spot LNG supply because of weak demand in Europe and Asia (particularly in South Korea) and lower short-term prices. Higher consumption of fossil fuels for power generation following the nuclear meltdown contributed to already high energy costs and led to record trade deficits. Japanese utilities have been reducing the share of crude oil and heavy fuel oil in the power generation mix, while increasing coal consumption with the start-up of new coal-fired plants. In 2013, coal consumption for power generation increased by 16% over 2012, and reached a record 40 million t in the first eight months of 2014. LNG consumption also remains at near-record levels, supported by more than 2.5 GW of new gas-fired power generating capacity commissioned in 2014 and a growing demand in the industrial sector driven by oil-to-gas substitution. At present, all of Japan's 48 nuclear reactors (which generated 34% of the country's power in 2010) remain offline, and the timeline for their restart remains uncertain. Last month, Japan's Nuclear Regulatory Authority approved a safety report of two reactors – Kyushu Electric Power Company's Sendai reactors No. 1 and 2 – bringing them a step closer to a restart in the next few months. However, strict safety standards for nuclear plant restarts combined with strong public opposition to nuclear power may delay the restarts of the plants. Since 2012, the increase in Japan's LNG consumption has averaged around 2.3 billion ft3/d compared with 2010. That increase is nearly equal to the total LNG import volume of the world's third-largest LNG importer, China, which imported 2.5 billion ft3/d in 2013. The incremental supply to accommodate Japan's increase was diverted primarily from Europe, where LNG consumption declined by 4.1 billion ft3/d (48%) in 2013 compared with 2010. Increased use of existing liquefaction capacity, particularly in Qatar and Australia, also contributed to the incremental supply. Additionally, the commissioning of the Papua New Guinea liquefaction plant in May, which coincided with lower demand in Europe, contributed to more spot supply available to Asian buyers. In South Korea, warmer-than-average winter temperatures and near-full storage levels going into summer prompted the Korean Gas Corporation to seek buyers or swap partners for 20 - 40 cargos to manage lower-than-expected demand. Reduced competition from South Korea increased supply and reduced prices in Asia Pacific markets. These factors contributed to lower average LNG import prices in Japan in the second half of the year, and were coupled with higher LNG import volumes. Japan's spot LNG prices averaged US$ 13.77/million Btu in June-August and declined to US$ 11.30/million Btu in September. While Japanese spot prices have been trending lower in the second half of 2014, they still remain significantly above natural gas prices in other regions

Tuesday, 7 October 2014

PNG PM welcomes Total commitment to gas project

5:38 am 08/10/2014 Papua New Guinea's Prime Minister has welcomed the commitment of the French company, Total to advancing the Elk-Antelope Liquefied Natural Gas project in Papua New Guinea. Peter O'Neill has received an update on the company's national engagement from Total's visiting Vice-President Arnaud Breavillac and fellow Total executives during their visit to PNG this week. The recent revised agreement between InterOil and Total paves the way for Total to bring its LNG expertise to develop PNG's second LNG project. Mr O'Neill says progress on Elk-Antelope gas fields in the East Papuan Basin is being made and Total is committed to working with the government, joint venture partners and stakeholders. Subject to continued feasibility studies, the project is expected to further establish PNG as a major gas energy hub. Total has described the PNG interest as a significant project in its global portfolio and an ideal opportunity to grow its business in the Asia-Pacific region. Total is the fifth-largest publicly-traded integrated international oil and gas company in the world. Joint venture partners for the Elk-Antelope LNG project are Total, InterOil, Oil Search and the Government of PNG.

Monday, 6 October 2014

Long-life assets tie Santos to Asian energy needs

October 1, 2014 David Lennox What's new? An announcement by Santos in April heralded the start of production at its Papua New Guinea Liquid Natural Gas facility (PNG LNG). The first commercial cargo of LNG was shipped to Japan in May. PNG LNG cost $US19 billion ($21.5 billion) to develop, with completion reached within a revised budget and ahead of schedule. Santos holds a 13.5 per cent interest in PNG LNG. Other participants include Oil Search with 29 per cent, ExxonMobil with 33.2 per cent, the PNG government with 16.8 per cent and others at 7.5 per cent. The PNG LNG facility is the processing hub for the Southern Highlands that now host oil and natural gas fields. The first oil field was discovered in 1992, and has since grown to some seven producing fields with numerous prospects still being developed and explored. The PNG LNG facility will produce some 9 trillion cubic feet of natural gas and 200 million barrels of liquids over an expected 30-year life. Annually, PNG LNG will produce about 6.9 million tonnes of LNG in its current two processing train configuration. Santos' Peluang gas field in East Java, in which it has a 67.5 per cent interest, also came on stream in March. The field is expected to produce around gross 25 million standard cubic feet of natural gas at its peak per day. The two start-up events had an immediate impact on Santos, with average daily production on a barrel of oil equivalent per day (boepd) basis surging to an average 164,000 for July, up from the 141,000 boepd average for the June quarter 2014. Outlook Production will surge through 2015, as new production from PNG LNG and Peluang are incorporated into the reported operational volumes. The better volumes will provide Santos with some revenue protection in what could be a volatile oil and natural gas pricing environment. Certainly, the reduction in capital costs to build PNG LNG and the replacement of the cash outflow with revenue should have a positive impact on Santos's financial performance, including strengthening an already impressive balance sheet. The benefits flowing from PNG LNG should end the 30¢ dividend plateau, with the company flagging its intention regarding dividends. The 2014 interim dividend was increased by 5¢ to 20¢, the first rise in three years. While PNG LNG will have an impact on 2015, Santos will in 2016 experience a replication of 2015, as its Gladstone LNG (GLNG) project moves into production. Santos holds a 30 per cent interest in the GLNG project. Santos remains on track to achieve 2014 production guidance of 52 million to 57 million boe. Price Over the past 12 months, during which time Santos has been building two LNG projects, its share price has traded in a broad sideways channel. Support though has been found at $13.20 and resistance at $15.25. Global events concerning the environment, and a growing sea change in energy usage toward natural gas is generating significant investor interest in Santos, with its natural gas exposure. Add PNG LNG now in production and GLNG coming on stream in 2015, and the financial benefits generated by these two projects; a challenge on the $15.25 resistance could be expected in the months ahead. Worth buying? Santos appears to be well positioned to participate in Asia's growing energy requirements now and in the years ahead. With its pipeline of long-life energy assets in Asian, Santos is in an enviable position to meet this increasing demand. While Santos' long-life assets also have the capability to deliver energy into Asia over the medium to long term.

Sunday, 5 October 2014

Bridging the Gap: Constructing the Komo Airfield

The remote location of key upstream area facilities and the limited road system in the PNG Highlands provided a logistical challenge for engineers who needed to transport large and delicate equipment for construction of ExxonMobil’s Hides Gas Conditioning Plant (HGCP). Following extensive evaluation by ExxonMobil and the PNG LNG Project partners, the solution was to build an airfield capable of handling the huge Antonov aircraft needed to transport specialised equipment that was either too large or too sensitive to be transported by road. Construction of the Komo Airfield began in 2010, with McConnell Dowell and Consolidated Contractors Company joint venture (MCJV) awarded the contract. The airfield site is located approximately 10 km south-east of the HGCP in the Hela Province of the Papua New Guinea Highlands. Constructed to accommodate the world’s largest commercial aircraft, the Antonov AN-124, the Komo Airfield infrastructure includes a 3.2 km runway with facilities including taxiways, a terminal, fuel storage facilities and radio and navigation equipment. A major logistics challenge faced the crews working to construct the airfield. The only approach to site was via an 800 km highway that required significant road and bridge upgrades in parts. With no facilities at the site of the airfield, a pioneer camp had to be established for the workforce so that site construction activities could commence. The project scope required close to 9 million m3 of earthworks, major crushed rock and asphalt pavement construction, building and facilities work, and two new bridges designed for heavy load transport on the road between the HGCP and the Komo Airfield. From the outset, ExxonMobil, the operator of the PNG LNG Project, realised that strong relationships would be key to the success of the Project. As well as developing an extensive Land and Community Affairs team and managing thousands of community meetings, ExxonMobil encouraged its contractors to also reach out to the communities around their specific sites. At Komo, ExxonMobil and MCJV established a Community Issues Committee (CIC) which enabled different clans and tribes in the area to communicate via open discussions about the project, which helped to bridge the gap between the construction teams and the local community. With the introduction of community projects such as water tanks, medicine supplies and support for the local education system, the local community embraced the ExxonMobil and MCJV teams and crews working in the area, thankful for the support and benefits from the project. The Project also reached out to schools, which included a particular focus on safety awareness. Through initiatives such as the distribution of colouring pages which showed the different types of machinery used on the project, children got a better understanding of the construction equipment and how to be alert and safe within the vicinity of the project. There were also extensive efforts to employ, train and enhance the skills of the local community to work on the Project. The results included many local workers earning an Australian Standard Certificate of Competence. Landowner spokesperson Jack Pawa believes the Project has provided fantastic opportunities for the local communities. “ExxonMobil and MCJV have changed this place basically by employing more local people here. Women, men who have never worked in any part of PNG, now they have been employed, so everyone is benefitting tremendously from the operation here,” Pawa said. After a culmination of years of effort, the first Antonov AN-124, the largest cargo aircraft, achieved successful touchdown on 3 May 2013 ready to offload the first of 88 scheduled runs. The Komo Airfield Project is an example of how a world-class project can be successfully undertaken in remote, inaccessible terrain and leave an ongoing positive legacy for the people and future generations of PNG.