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Oil Search: Production good

Staff Reporter | 5:58 AM | |||
DESPITE the weakness in the global oil price, the Papua New Guinea LNG Project co-venturers remain committed to pursuing the project expansion activities, Oil Search managing director Peter Botten says.
Botten said it was their stand because of maximising production through the existing trains, and the construction of a potential third-train continued to offer attractive returns.
“Material progress is also being made on the Papua LNG (liquefied natural gas)  project, which is regarded by the participants and a range of independent experts as one of the most competitive greenfield LNG projects in the world,” Botten said.
He said Oil Search was in the very fortunate position of having a range of producing assets with low operating costs and small sustaining capital requirements.
“Based on the current cost structure, the company would generate a positive operating cash flow even if oil prices fell to US$20/barrel,” he said.
“A number of changes were made to the company’s organisational structure, offices and internal processes in 2015, to improve efficiencies and reduce costs.
“In addition, almost all third party contracts have already been renegotiated or are being reviewed, in line with reduced forward work programmes and current market conditions.” Botten said given the recent further slump in oil prices, the company was using the information gained through the 2015 Business Optimisation Programme “to prioritise further cost reduction opportunities across our business’’.