Png Total Gas Agreement
The companies had insisted that Total comply with the LNG agreement signed in April, and Oil Search warned in August that the cost of the project could increase if it was delayed by protracted discussions. Oil Search shares, which have fallen over the past three months amid uncertainty over gas deals, were up 2.1% shortly after the government`s announcement in a broader flat market. The downsizing is part of a decline of approximately 34% in Oil Search`s global workforce by the end of the year as part of restructuring and cost reductions. This points to further complications in the project, which has already been delayed due to differences between the new government of Papua New Guinea and the project partners. It also increases the financial burden on private stakeholders. The P`nyang gas agreement must be sealed before a complex pre-flow process for a larger associated liquefaction project can begin, with $13 billion of Papua LNG, led by Total, but also ExxonMobil and others, which is targeting IDF this year and production in 2024. Doubts about the gas deal intensified in August, when the government suddenly called for talks on revising the agreement. The government of Papua New Guinea has suspended negotiations with ExxonMobil for a gas deal for the planned development of the P`nyang gas field in the country`s western highlands. Papua LNG is also facing a wave of global competitors aiming to increase demand for LNG in the mid-2020s and who may not occur. “A P`nyang gas agreement is a precursor to the entire LNG expansion project, which is competing for a rapid market opening later in the decade,” says Kavonic. Tuesday`s agreement allows the partners to enter the FEED phase of the study that will lead to the final investment decision in 2020. Prime Minister Peter O`Neill said friday in Port Moresby, the capital, that “physical conditions” had been agreed. He said negotiations on how municipal and provincial government revenues would be shared required more work.
I would say that we are close to 50%60% already having our understanding of revenue participation,” O`Neill said at Reuters` request. Differences of opinion on landowners` rights and revenue-sharing agreements have been an almost constant feature of the evolution of resources in PNG. A non-binding Memorandum of Understanding (MOU) signed on Friday is basically a government commitment to rule out a gas agreement in early 2019 that would lead to the development of Total-operated Papua LNG. The MoU was signed at the Asia-Pacific Economic Conference (APEC) in Port Moresby, in the presence of Peter O`Neill, Prime Minister of Papua New Guinea, and Patrick Pouyanné, President and CEO of Total. The proposed gas agreement is expected to be finalized in the first quarter of 2019. Total operates the Onshore Elk and Antelope fields and is alongside ExxonMobil partners (28.3%) the largest shareholder of PRL-15 with a 31.1% stake. and Oil Search (17.7%), post the State back-in right of 22.5%.