Oil Search: maintenance hits PNG LNG production

Papua new Guinea-focused Oil Search reported lower production at the ExxonMobil-led PNG LNG project in the second quarter of this year due to planned major maintenance works.

Oil Search, which has a 29 percent stake in the 6.9 mtpa PNG LNG project, said the project’s annualized production rate reached 8 mtpa in the May-June period.

This compares to 8.5 mtpa in the previous quarter and 8.8 mtpa in the same quarter a year ago, according to the ASX-listed firm.

Oil Search said the partners have completed the planned maintenance program for PNG LNG train one, deferred from 2020, and train two “ahead of schedule.”

In total, PNG LNG delivered twenty-six LNG cargoes to customers during the second quarter, same as in the first quarter and one less compared to the same period last year.

These include 25 cargoes sold under contract, including six under mid-term agreements, and one on the spot market, Oil Search said.

Moreover, the average realised LNG and gas price increased 21.3 percent to $8.61 per mmBtu in the second quarter.

Oil Search this was due to continued recovery in oil prices, and higher spot prices due to colder than expected temperatures in Europe and continued drawdowns of LNG storage levels.

Papua LNG moving forward

During the second quarter, the Papua LNG project progressed financing, technical and commercial work in preparation for a further ramp-up in project activity in the second half of this year, according to Oil Search.

“Key deliverables from this preliminary work will allow the project to progress towards its objective of entering FEED in 2022,” the firm said.

To remind, France’s TotalEnergies said earlier this year it would take a final investment decision on the Papua LNG project in 2023.

This announcement followed the signature of the fiscal stability agreement but also the award of the license extension in February this year.

TotalEnergies is developing the proposed 5.6 mtpa project with partners ExxonMobil and Oil Search.

Previously, the partners planned to develop Papua LNG with an expansion of ExxonMobil’s PNG LNG adding three new production trains at the existing Caution Bay plant.

Under the deal signed in February, the partners plan to build two new production units at the PNG LNG site.

Papua LNG project will target the production of the two main discoveries of Block PRL-15, Elk and Antelope.

Furthermore, the partners will transport the gas produced by these fields via a 320 km onshore/offshore pipeline to the plant site.

Total operates the Elk and Antelope onshore fields and is the largest shareholder of the PRL-15 permit with a 31.1% interest, alongside partners ExxonMobil (28.3%) and Oil Search (17.7%), post the state back-in right of 22.5%.

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