In early April of this year, Total reached an agreement with the government of Papua New Guinea allowing work to begin on a $13bn (£9.9bn) project. This will see the country’s energy exports roughly double the Pacific island nation’s exports of liquefied natural gas (LNG) to 16million tonnes per year. Under the deal, the state of Papua New Guinea receives a 22.5% stake in the $13bn project.
The $13bn PNG LNG project is an integrated development that includes gas production and processing facilities and is currently run by ExxonMobil. Totals’ two onshore gas fields, Elk and Antelope, will be developed to feed two new production units to be built at the PNG LNG plant.
Total has said the total capacity of the project will be 5.4 million tonnes per year, whilst simultaneously unlocking more than one billion barrels of oil equivalent.
Final investment decision (FID) is targeted for 2020 with production targeted for 2024.
However, it has recently been announced that Total and ExxonMobil have become embroiled in a political crisis in Papua New Guinea that risks delaying the $13bn project, potentially by as much as two years, to beyond 2025.
The turmoil comes, in part, as a result of accusations against the Papua New Guinean Prime Minister Peter O’Neill relating to the financing of the PNG LNG project. Opposition MPs are set to hold a no-confidence vote against Peter O’Neill in parliament next week.
Peter O’Neill opposing MPs support the development of the PNG LNG project on account of the investment it would bring the resource-rich, but poverty-struct nation. The controversy comes after a PNG Ombudsman report leaked to the press stated: “Mr. O’Neill acted improperly by securing an A$1.2bn ($831m) loan from UBS to buy shares in Oil Search in 2014 without seeking formal parliamentary approval”.
ExxonMobil and Total have not made any public comment on the political turmoil.
The PNG LNG plant operated by ExxonMobil, on behalf of five co-venture partners, connect over 700 kilometers of onshore and offshore pipeline and include a gas conditioning plant and a liquefaction and storage facility. Liquefied Natural Gas (LNG) production began in April 2014 and has since supplied LNG to four major customers in the Asia region, including China Petroleum and Chemical Corporation (Sinopec), Osaka Gas Company Limited, The Tokyo Electric Power Company Inc. and CPC Corporation.
In 2017 PNG LNG produced a total of 8.3 million tonnes of LNG, a significant increase of 20% from the original design specifications of 6.9 million tonnes per annum (MTA). Over LNG LNG’s lifespans, an estimated 11 trillion cubic feet of LNG will be produced.
PNG LNG has brought several positive benefits to the region as ExxonMobil and its co-venture partners focused heavily on Papua New Guinean involvement in the project. Of the production workforce (2,600) a total of 82% of workers were Papua New Guinean and 22% woman. More than 10,000 Papua New Guineans were trained for construction and operation roles and more than 2.17 million hours of training through 13,000 training programs were delivered.
Other key facts include;