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ExxonMobil's LNG project going well

Staff Reporter | 5:39 AM |
THE managing director of ExxonMobil PNG Ltd ANDREW BARRY says the US$19billion PNG LNG project has achieved outstanding performances in its different areas of operation. He told The National Business Editor SHIRLEY MAULUDU that the project had not only made great progress but also invested millions of kina in the different areas of its operations. Below are excerpts from the interview.

MAULUDU: Briefly tell us about ExxonMobil PNG Ltd and its operations in Papua New Guinea.
BARRY: There are three different parts of the operations at the moment. We are the operator of the PNG LNG project. And with the recent acquisition we’ve made of InterOil, we are now a partner in the PRL 15 or the Papua LNG project operated by Total. And then we have also recently entered into some offshore licence areas which are more than 150 kilometres off the coast of the Gulf of Papua and in more than 1500 metres of water.

MAULUDU: It has been three years since the first LNG shipment was made from the PNG LNG project. How would you describe the progress so far?
BARRY: I would say absolutely outstanding. And I’ll characterise it in a number of different areas.
The first one and most important is our safety performance. If you think of 2016, we had the best year ever from a safety perspective. And we are really actually the best in class.
Whether you look at it internally from ExxonMobil and externally from the industry as well. We’ve worked almost 70 million hours without a single lost time to injury.
And we’ve worked since 2013 without anyone getting hurt from that perspective. So it was an outstanding performance.
And from environmental performance, again we had our best year ever in 2016. We see that from the biodiversity perspective things went really well. The regeneration of all our sites is going better than expected. We continue to invest heavily in the communities in the areas of education, empowering women, and health.
We have recently been helping in the Highlands Highway – K150 million investment in Highlands Highway. And from a production perspective, we have just delivered our 300th cargo. Production has been going about 20 per cent above what our designed at the PNG LNG. So all the key matrix, we are doing outstanding. Most important thing is that the performance of the teams have done that. In my position, I couldn’t be more proud and more privileged to lead such a fantastic team.
We’ve got about 2500 people working on the PNG LNG project and more than 80 per cent of them are Papua New Guineans.

MAULUDU: Being the first operator of the major LNG project in the country, do you think Government legislations and policies for the petroleum sector are framed in a way to encourage further investment in the industry itself?
BARRY: I think the policies and legislations are sound. We have demonstrated through the PNG LNG project that within that framework, we can make projects happen.
And so we understand that and are comfortable with it. With any legislation or policies, there is room and opportunities for improvement. But we don’t see that there needs to be a whole rewrite of any of the policies or legislations. We think they are sound. And importantly, the development of multiple projects happens, improving and increasing the capacity and resources within the Government.
For example, the DPE (Department of Petroleum and Energy) is really what is needed to be able to progress some other projects going forward.

MAULUDU: It has been revealed recently that there is still a huge potential of oil reserves yet to be tapped into. What is ExxonMobil’s view on that?
BARRY: We are very upbeat of that and excited about the opportunities right across the country. And as part of the InterOil acquisition, we picked up some exploration acreage around PRL 15, around Papua LNG. So we feel that there is more potential out there that we would like to go out and explore. In the offshore, we now have got three offshore blocks (more than 150 kilometeres offshore, 1500 metres of water) and that really played to ExxonMobil’s strengths and capabilities to be able to develop those types of resources.
It still requires a lot of work at the early days because we need to go out and do more seismic activities and drill wells to be able to then understand what these resource base is.
But we are very excited and would like to think that there is a lot of opportunities.

MAULUDU: How competitive then do you think the country’s petroleum industry is?
BARRY: Within PNG, it can be quite expensive to develop resources, driven by the terrain and logistics and such. For example, an exploration well can cost more than K300million to drill one. When I look at the competitiveness, there are different factors that ultimately play into that competiveness.
It’s the cost of developing those resources, it’s the fiscal regime that’s in the country.
And what’s really important is that when we work in partnership with Government, is to be able to find that balance to be able to continue to make the country competitive for resources.
Certainly there are lots of opportunities out there and we are excited about, I think that we’d be able to develop the resources but we’ve got to work on the cost, to get the cost down and more importantly, a stable, physical environment such that we have confidence in developments.

MAULUDU: We understand the PNG LNG project has just shipped its 300th LNG cargo. What does that mean to ExxonMobil as the operator?
BARRY: We are fiercely proud of what we’ve done with PNG LNG. I think from the reputation that it has in the international community, it is of a very safe, reliable supplier, and that is really important to us because that reflects on the reputation.
And importantly, that reflects on the reputation of the country.
If you think about other players, for example, Total, coming into the country, to look to develop additional resources, the success of the PNG LNG project has enabled or given the opportunity for others to come in and say if ExxonMobil is able to do it, we could come in and do it as well.
And so, we welcome that because we look at the development of the oil and gas resources in the country, which is really important enabler to improve the living standard of the country. And as we see others come in and ourselves looking to develop more, we encourage that.
We are very proud of what we’ve done as an operator and believe that our leadership has been key to that. But we also can’t forget that it’s a partnership and a team.
And so with our co-venture partners Oil Search, Santos, Kumul Petroleum Holdings Limited, Mineral Resources Development Company, JX Nippon Oil and Energy, very important partnership that we have within our co-venture. And extremely important is the Government and the communities where we operate.
And we’ve also got the buyers in China, Japan and Taiwan, all of our suppliers.
It’s a really about partnerships and team work. And what is important is that we are all working together for the success of the project because if you have one element of it that is pulling against that, then it sort of falls apart.

MAULUDU: How involved are the locals in the spin-offs of the PNG LNG project?
BARRY: They are very much involved. And there are multiple different ways that the community benefits from a project like ours. We are using a lot of Papua New Guinean businesses and in particular landowner companies.
At the moment I think there are  about nine landowner companies we are using at all the production activities.
If you look at how much money was spent on landowner companies, it will be more than K3.5 billion.
And more than K13 billion with Papua New Guinean companies. Then the employment, and community investments and that. And you also have the royalty development levies that go directly to the landowners and provincial governments.
There have been some of the challenges where they have been held up in some courts. But there is multiple facets of opportunities.
And importantly if we look at business opportunities, if you look at SMEs, we would like to look at the full range of opportunities from large landowner companies right through to micro SMEs. The National