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Outlook for LNG development challenging in PNG

Staff Reporter | 5:13 AM |
 PAPUA New Guinea is well-resourced to host additional liquefied natural gas development, according to a report.
Respected consultant firm Facts Global Energy said PNG would have four to five LNG trains by 2022 and may be six to seven trains by 2030.
“A limiting factor is PNG is a geographically challenging location to undertake drilling and construct pipelines, but current PNG LNG plant site has capacity for several trains and successful commissioning of ExxonMobil project demonstrated that these issues were manageable,” FGE said.
It said although current outlook for LNG development was challenging, PNG’s competitive position for LNG development remained strong.
“PNG is advantaged by being “wet gas” prone. Revenue from associated condensate positively impacts project economics. PNG’s reservoirs are also understood to have high deliverability and low sustaining requirements.”
FGE added that a limiting factor for domestic development was market size. “If significant scale gas development was to occur, it must be export focused. LNG was likely to be the best option.”
It said the fall in the price of oil had made outlook for Government revenue from PNG LNG project less attractive, but PNG had little option but to continue to pursue resource development. Resource development was a critical component of PNG’s economic growth.
While decline in oil prices had resulted in a less than anticipated boost to government revenue from PNG LNG project, this was unlikely to result in reduced enthusiasm for further development.
Meanwhile, FGE highlighted that creation of National Petroleum Company PNG (NPCP) and new legislation enshrining role of NPCP(which would be renamed Kumul Petroleum) as only legitimate national oil company in PNG was a very positive development. The National