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Oil Search seeks cooperation in Papua New Guinea

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LNG Industry,

Bloomberg are reporting that 62-year-old geologist Peter Botten is seeking to engineer a US$5 billion deal that would confirm the emerging status of Papua New Guinea as one of the world’s most lucrative gas exporters.

As managing director of Oil Search Ltd., Botten is trying to forge an agreement between two of the world’s biggest oil companies, ExxonMobil Corp. and Total SA, as they weigh plans for further expansion of LNG projects in the southwestern Pacific nation.

At stake is the opportunity to tap Papua New Guinea’s ample gas reserves more efficiently and meet a demand shortfall early in the next decade, avoiding the cost blow-outs that have delayed or scuppered new gas-export projects globally amid a prolonged market slump.

The country’s first LNG complex - the US$19 billion PNG LNG - briefly made the sparsely populated nation among the world’s fastest-growing economies after it started shipping gas in 2014.

Oil Search is a partner with Exxon in PNG LNG and also with Total and InterOil in Papua LNG, the country’s next major gas venture. Exxon is also strengthening its hand as it prepares to join the Total-run group via its impending takeover of InterOil, which discovered the vast Elk-Antelope gas field northwest of Port Moresby. 

Botten is pushing the idea that integrating both projects could save money and increase returns. For Oil Search, the savings could total US$2 billion to US$3 billion should the two ventures reach an agreement.

Exxon appears on board. It favours processing the gas from Elk-Antelope and loading it onto ships at the existing PNG LNG complex.

Total also remains open to cooperation.  Collaboration between the developments could result in savings of US$5 billion.

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