PNG has enough for second LNG scheme, says Sonk

Papua New Guinea (PNG) has enough gas to support a second standalone LNG scheme led by France's Total, a government official said last week.

The official was dispelling concerns that PNG LNG operator ExxonMobil's takeover of InterOil, now approved by the latter's shareholders, would leave the country with just one liquefaction project.

Total's proposed Papua LNG "would still be built" even once Exxon expands its 6.9 million ton per year PNG LNG project with a third train, says Wapu Sonk, managing director of PNG national oil company, Kumul Petroleum. Kumul holds the government's 16.6 percent stake in PNG LNG.

"Exxon has been in the country for a long time and knows the government's position, which is to have two supermajors in the country developing two separate projects," Sonk said on the sidelines of CWC's 8th World LNG Series summit in Singapore. "But if there are synergies to be explored in the meantime under current market conditions, we will (explore them). That's basically how we are driven."

Sonk's comments contrast with those made recently by Oil Search, another PNG LNG stakeholder, which said it was "highly unlikely" that Total would still build greenfield Papua LNG (IOD Aug.24'16).

The PNG government has no legal right to block Exxon's acquisition of InterOil but has a say in determining how projects are developed, explained Sonk, who was speaking alongside PNG Energy Minister Nixon Duban.

"Antelope7 will still be drilled," he added, referring to a well on Petroleum Retention License 15, the acreage earmarked to feed future LNG capacity.

Total, which holds 40.1 percent in PRL 15 alongside Oil Search on 22.8 percent, was planning to drill Antelope7 this quarter, to be followed by reserve certification to help determine the capacity of Papua LNG and whether it features one big train or two smaller trains (IOD Jul.18'16).

The French major had backed Oil Search's $2.2 billion bid to buy InterOil, which has a 36.5 percent stake in PRL 15, only for Exxon, to make a superior offer (IOD May23'16). Exxon believes the best value proposition is for the PRL 15 resources to go through its existing facility.

As gas from InterOil's share in PRL 15 is now expected to feed the third train of PNG LNG, Sonk suggested Total may have to farm into nearby acreage to support future trains.

"There have been gas discoveries outside PRL 15, so we are very confident of a separate project after the third train," he said.

Since Exxon swooped for InterOil, the PNG government has come in for criticism for potentially allowing the US firm to take a monopoly position.

(Kumul Petroleum managing director Wapu Sonk.)

Press release