But in the Asian region, he said LNG price is related to oil price. Dr Earle said low oil price translates to low LNG price for spot sales and new contracts and buyers can renegotiate lower prices for existing contracts. He said this opens up a lot of opportunities for Papua New Guinea despite the prevailing slow market conditions for oil and gas. “Despite market conditions, Japan needs substantial new LNG supplies to fill the expiring contracts post-2020, and this presents an opportunity for PNG projects, especially Papua LNG and PNG LNG Expansion. Dr Earl who also gave an overview of key Petroleum Projects said PNG became an oil exporting nation in 1992 and began producing gas for in 2014. “Oil production declined from the first year, whereas gas developments have the potential to increase LNG production 3 or 4-fold.” He said major new projects are being planned for ExxonMobil in P’nyang,
Total in Papua LNG and Twinza Oil (Offshore). “KPH is waiting to backin to these developments and is involved in the promotion and development of strategic infrastructure, gas aggregation projects and mini-LNG schemes for domestic power into the grid.” Dr Earl said oil price should have been falling since 2010 but that was sustained by OPEC (Oil Producing and Exporting Countries) He said this encouraged huge investment in shale oil and gas production in the US, plus new LNG projects in Australia, USA and elsewhere. He said historically oil prices show super-cycles of 20-30 years duration. “High oil prices lead to higher investment and then oversupply and price collapse because the global market is not regulated.” He said US$20-US$40/bbl was the floor of the previous cycle and the current floor of US$40-US$50/bbl posing the question that will it prevail for 3-5 years?