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Papua New Guinea LNG partners set plans for big expansion

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Reuters are reporting that ExxonMobil Corp and France’s Total SA have reached broad agreement on plans to double gas exports from Papua New Guinea.

The plan to expand the ExxonMobil-operated Papua New Guinea LNG plant to around 16 million tpy would see it rival Australia’s biggest LNG projects, at a cost of around US$13 billion.

Oil Search said the companies plan to add three new LNG units, or trains, with two underpinned by gas from the Elk-Antelope fields, run by Total, and one underpinned by existing fields and the new P‘nyang field, run by Exxon.

The partners aim to start engineering and design work in the second half of this year, but first need the PNG government to approve the plans.

The expansion is expected to be much cheaper than the original US$19.5 billion cost of building the PNG LNG plant.

Analysts estimate the 8 million tpy of new capacity could be added for between US$12 billion and US$14 billion, or around US$1600 a t.

That would be less than half the per t cost of Chevron Corp’s Gorgon LNG plant in Australia, which is slightly smaller than the expanded PNG LNG plant would be.

Australia’s other major LNG plant is the Woodside-operated North West Shelf, which has annual production of just under 16 million tpy.

The partners in Papua New Guinea are racing to start producing from the new trains by the mid-2020s, when the LNG market is expected to slide into deficit due to rapidly growing demand in Asia and a lack of other new projects.

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